BUSINESS BEFORE QUESTIONS

London Local Authorities and Transport for London (No. 2) Bill [Lords]

Motion made,
	That the promoters of the London Local Authorities and Transport for London (No. 2) Bill [Lords], which was originally introduced in the House of Lords in Session 2007–08 on 22 January 2008, may have leave to proceed with the Bill in the current Session according to the provisions of Standing Order 188B (Revival of bills).—(The Second Deputy Chairman of Ways and Means.)

Hon. Members: Object.
	To be considered  on  Tuesday 12  June .

ORAL ANSWERS TO QUESTIONS

DEPUTY PRIME MINISTER

The Deputy Prime Minister was asked—

Royal Succession

Helen Grant: What plans he has to bring forward legislative proposals on the rules governing succession to the Crown.

Mark Lancaster: What plans he has to bring forward legislative proposals on the rules governing succession to the Crown.

Nicholas Clegg: We are working closely with the New Zealand Government to secure the agreement of all the Commonwealth realms to the introduction of UK primary legislation on royal succession. Legislation will be introduced once we have secured this agreement and when parliamentary time allows.

Helen Grant: If the birds and the bees of the romantic Isle of Anglesey were to conspire and bless our future King of England and his wife with the patter of tiny feet before this law was enacted, and if that royal baby turned out to be a little girl, would she succeed to the throne?

Nicholas Clegg: If the birds and the bees were to deliver that blessing to the Duke and Duchess of Cambridge—and, indeed, the nation as a whole—that little girl would be covered by these provisions and changes to the rules of succession, because they operate as from the time of the declaration at the Commonwealth summit last October. It is important to remember that the rules are de facto in place, even though de jure they still need to be implemented through legislation in the way I have described.

Mark Lancaster: Will the Deputy Prime Minister confirm that there are no plans to change the requirement for the monarch to be a communicant of the Church of England?

Nicholas Clegg: There are no plans whatsoever.

Paul Flynn: In the interests of democracy and dragging the monarchy and the office of Head of State into the 21st century, can it be arranged for the new Bill to permit alternative candidates to stand as Head of State, given the misgivings about King Charles III?

Nicholas Clegg: The hon. Gentleman mentions what sounds like another attempt to resurrect the alternative vote system, which I do not think was greeted with universal acclaim last year and would not apply in this area either. More seriously, I do not think he should belittle the enormity of this change. We are getting rid of some very long-standing, discriminatory anomalies on male primogeniture and the rule preventing heirs to the throne from marrying—uniquely among all religions—Roman Catholics. That is real progress that has not been achieved in a long time.

House of Lords Reform

Mark Durkan: What assessment he has made of the effect of his proposals on House of Lords reform on the relationship between the two Houses.

Nicholas Clegg: The Government believe that the primacy of the House of Commons will be maintained. We accept, of course, that the conventions and agreements between the two Houses will continue to adapt and evolve, but this is compatible with the continued primacy of the House of Commons. I stress that this is not only the view of the Government; the majority of the Joint Committee on the Draft House of Lords Reform Bill said that the current basis
	“on which Commons primacy rests would suffice to ensure its continuation”.

Mark Durkan: The Deputy Prime Minister will hear many Members wax precious about the primacy of this Chamber, but this Whip-tamed Chamber spends far less time considering legislation and has a poor rate of success with amendments. Is there not something pathetic about self-respecting democratic legislators having to rely on the fact that another House is unelected to claim legitimate primacy?

Nicholas Clegg: I share the hon. Gentleman’s view that, although some concerns about the primacy of the House of Commons need to be taken seriously, some are overstated, not least because the changes that we published in our draft Bill would mean that, because the other place would be elected in instalments, it would never have a more recent, fresher democratic mandate than Members sitting in this place. When combined with other differences of mandate, constituency and so forth, that approach will ensure that the relationship between the two continues to guarantee the primacy of this place.

Eleanor Laing: It is interesting that the Deputy Prime Minister quoted selectively from the Joint Committee report. That report also stated:
	“We concur…that Clause 2 of the draft Bill is not capable…of preserving the primacy of the House of Commons.”
	Does he accept that?

Nicholas Clegg: I accept that the Joint Committee received evidence, particularly from Lords Pannick and Goldsmith, suggesting that the two Parliament Acts should be incorporated and reflected in clause 2 to clarify this issue of primacy beyond doubt. We are actively considering that and all the Joint Committee’s recommendations.

Meg Munn: Would it not have been sensible to start out by looking at the powers and responsibilities of the second House first, rather than just continuing as we are?

Nicholas Clegg: It is important to stress that the Joint Committee did not make that suggestion, and neither have a succession of cross-party committees and commissions over the last several years. All of them have agreed that there is nothing incompatible about increasing the legitimacy of the other place, on the basis of the very simple, uncontroversial principle that the people who make the laws of the land should be elected by the people who obey the laws of the land, and that this matter should in no way need to wait for a wider discussion on the respective powers of the two places.

Michael Crockart: Given that we are now part of a multicultural and polytheistic society, does my right hon. Friend agree that now is the time to remove bishops from the House of Lords, rather than increasing the proportion of seats that they would hold?

Nicholas Clegg: I know there are strongly held views on this issue, as on many issues to do with reform of the other place. The balanced approach that we took as a Government in the draft Bill was to reduce the number of bishops from 26 to 12, but not to remove them altogether.

Sadiq Khan: I thank the Deputy Prime Minister for the way in which he answered those questions. How soon does he expect to be able to publish the Bill, and how many days does he think it is reasonable for MPs to have to debate it?

Nicholas Clegg: We hope to publish the Bill well before the summer recess. The amount of time that would be allocated to it would be the subject of discussion through the usual channels and then a possible timetable vote in the House of Commons.

Electoral Register

Amber Rudd: What steps he is taking to improve the completeness and accuracy of the electoral register.

Mark Harper: We are bringing forward our Electoral Registration and Administration Bill, which has its Second Reading in the House tomorrow, to improve the completeness and accuracy of the electoral register.

Amber Rudd: How does my hon. Friend expect individual voter registration to help with efforts to get more disabled people and young people registered to vote?

Mark Harper: It is certainly true that there has been a lot of focus on the possible risks to this approach. When we debate Second Reading tomorrow, I hope that colleagues will see that we have taken a lot of steps to deal with that. However, there are also a number of opportunities, one of which is through the online registration system that we are introducing. We hope that disabled people, particularly those with visual impairments, will find it more convenient and easier to register. We may therefore find that, among certain groups, we have a better chance of getting people registered to vote and able to exercise their democratic rights.

Frank Roy: Will the Minister publish an ongoing league table showing the number and percentage of people on the electoral register?

Mark Harper: Information about people on the electoral register is, I understand, already published by the Office for National Statistics. It is difficult to publish a league table showing the percentage of eligible voters, because no clear information is available about the number of eligible people in each parliamentary constituency. However, information on the number of people registered to vote in each area is regularly published by the Office for National Statistics.

Robert Buckland: Can my hon. Friend assure me that all appropriate steps will be taken to reduce the risk of people falling off the register, and that registration officers will have all the tools available to them to ensure that registration is maximised in their local areas?

Mark Harper: I can give my hon. Friend that assurance. We have made a number of changes to the Bill to reflect the recommendations of the Select Committee on Political and Constitutional Reform, whose Chairman, the hon. Member for Nottingham North (Mr Allen), is in his place today. When colleagues on both sides of the House study the changes, they will see that we have taken all the steps to maximise the accuracy of the register and to ensure that no one eligible to vote falls off it in the transition.

Wayne David: If the Government wish, as they say, to have a complete and accurate electoral register, why are they pressing ahead with their individual electoral registration legislation before the results of the next round of data matching are known? Can it be because they are thinking about the parliamentary boundary review of December 2015?

Mark Harper: That is not the case. The hon. Gentleman knows that, based on the data-matching pilots we have already run, we think that there is good evidence that we will be able to confirm two thirds of voters who are already on the electoral register and move them over to the new one, assured that they are real people registered at those addresses. We will run more pilots later this year, subject to parliamentary approval of the orders, to test that proposition further and see whether there are any other lessons to learn. However, we are confident from the work that we have done so far that the process is robust.

Lobbying

Huw Irranca-Davies: What plans he has to bring forward proposals on the regulation of the lobbying industry.

David Crausby: What plans he has to bring forward proposals on the regulation of the lobbying industry.

Stephen Timms: When he plans to implement the commitment in the coalition agreement to introduce a statutory register of lobbyists.

Mark Harper: The hon. Member for Ogmore (Huw Irranca-Davies) will know that we have just carried out a consultation on our statutory register of lobbyists, which closed on 20 April, and we are now studying the responses. We will publish our response to that consultation before the summer recess, and we will publish a White Paper and draft legislation later this Session.

Huw Irranca-Davies: I thank the Minister for that helpful answer. Abuse of lobbying is nothing new, but in recent years we have had to deal with the issue of helpful calls to News International. We have seen the Conservative co-treasurer offering dinner dates with the Prime Minister, Bell Pottinger offering influence at No. 10, and Adam Werritty and so on. So may I ask the Deputy Prime Minister to get on with this register, because people were disappointed not to see it in the Queen’s Speech and this situation is undermining our democracy?

Mark Harper: I would add to that list of examples, because people are also concerned when trade unions write amendments for the Labour party. I will not take any lectures from the Labour party on dealing with this issue at speed, because it had 13 years to tackle the issue and made no progress at all. It is important that we get this right, so that we do not have to keep returning to it. We have published a consultation, I have set out the steps we are going to take to publish a White Paper and a draft Bill, and I have already made a commitment,
	when giving evidence last week to a Select Committee, that we will deal with this issue, as we have committed to do, this Parliament.

David Crausby: The Prime Minister has already been proved right when he said that lobbying would be the “next big scandal” to happen, so why this delay? Does the Minister not agree that any failure to bring forward meaningful legislation will justifiably feed the public mistrust of politicians? Is it not time that we completely cleaned up this place?

Mark Harper: I am very happy to agree with the first part of the hon. Gentleman’s question; the Prime Minister is, indeed, always right. On the second part of the question, the hon. Gentleman did not listen to my previous answer. I am not going to take any lectures from the Labour party, which did nothing on this subject. It is important to get this right. We have published the consultation document. He will know, from listening to what people have said publicly, that there are a range of views on how we deal with this. We are going to look at those consultation responses, publish our proposals and put them up for pre-legislative scrutiny, so that people can look at them, and we will legislate and deal with this matter in this Parliament, as we have committed to do.

Stephen Timms: The Minister still has not explained to us why the Government are dragging their feet. It was widely expected that this Bill would be in the Queen’s Speech and we have been told that the draft legislation is going to be available before long, so why not just get on with it and bring the legislation forward?

Mark Harper: Again, I remind the right hon. Gentleman that his party did nothing about this when in government. We will take one lesson from his Government: rushing forward with ill-considered legislation that then is not brought into force or which goes wrong when it is introduced and then has to be revisited is not a good way of legislating. We have published a number of Bills in draft so far, in the first Session of this Parliament, including the one dealing with electoral registration. That is a good way of legislating and it is generally supported across this House. It is better to get it right and do it well, rather than rush it and make a bodge of it.

Christopher Chope: What is my hon. Friend doing to regulate that most destructive form of lobbying—that which comes from Liberal Democrat Back Benchers and is designed to undermine the economic recovery by arguing against the regionalisation of public sector pay and against the Beecroft report?

Mark Harper: Speaking for myself, I enjoy being lobbied by Back Benchers of all descriptions, be they Members from the Government parties or Opposition Members. I am very happy to listen to views. The Government will then move forward with their proposals on lobbying, based on the evidence and on the responses to our consultation.

Stephen Lloyd: The Minister will know that there is considerable opposition on both sides of the Houses to any regulation on lobbying, and
	we all know why, certainly after 13 years of the Labour Government. However, will he confirm that the key is transparency? If the public know which politicians are meeting whom, it will be much harder for anything dishonourable to happen. I hope that that will be a key part of any announcement.

Mark Harper: The hon. Gentleman is right to focus on transparency. It is one reason why Ministers in this Government are much more transparent about those whom we meet than Ministers in previous Governments were—[Interruption.] It is no good the hon. Member for Rhondda (Chris Bryant) laughing; this Government are much more transparent about the meetings that Ministers have. Transparency is the key; that is where we have identified the problem and this is what we are going to solve with our proposals. As I said, it is important to get it right and get the job done, and that is exactly what we are going to do.

House of Lords Reform

Steve Rotheram: What his policy is on upholding the principle of accountability in a reformed House of Lords.

Nicholas Clegg: Members of a wholly or mainly elected reformed second Chamber will serve long non-renewable terms. Non-renewable terms of three electoral cycles have been a feature of cross-party reform proposals since they were agreed over a decade ago by the Wakeham commission in January 2000. This is why the idea was reflected in the draft Bill. It has since been endorsed by the Joint Committee, and we expect to maintain it in the Bill shortly to be brought before Parliament.

Steve Rotheram: It appears that the Deputy Prime Minister has the anti-Midas touch and that great opportunities for lasting constitutional reform have been squandered because of poor political judgment. What is the Deputy Prime Minister’s rationale for believing that those 15-year non-renewable terms for the second Chamber will renew democratic accountability? As a result, will Lords reform simply be another failed Lib-Dem coalition policy?

Nicholas Clegg: I know that the hon. Gentleman meticulously wrote his question before he listened to the initial answer, so perhaps he will listen to this one. As I said in my first answer, the idea of three non-renewable terms is not something invented by this coalition Government or the Joint Committee; it was first identified on a cross-party basis over a decade ago. That is why—quite sensibly, in the name of consensus and in pursuit of real reform—we are maintaining that proposal now.

Jake Berry: If we are to have real reform of the House of Lords and to restore trust in politics, not only should the House of Lords be largely elected, but is it not now time to send the ermine up the motorway to one of our great northern cities, such as Manchester or Sheffield?

Nicholas Clegg: That is an excellent idea. We will include this novel proposal in our thinking. On a more serious note, all three main parties put before the country in May 2010 manifestos that committed us all collectively to House of Lords reform. If we are to honour our manifesto commitments, I think we should proceed quickly and swiftly.

David Winnick: Can the Deputy Prime Minister explain why so few of his own party’s Members in the House of Lords support his proposals? Indeed, Lord Ashdown is almost a lone voice. What is the explanation for that?

Nicholas Clegg: The power of a whiff of ermine on people’s opinions on reform of the House of Lords has never failed to amaze me. All I can say is that the manifesto commitments of the hon. Gentleman’s party, my party and the Conservative party were clearly in favour of completing this century-long debate on the reform of the other place. I think we should now get on with it.

Laura Sandys: When the Bill is published, will it come with a financial assessment of what will happen to the House of Lords if we do not reform it, and of what will happen once we get to, say, 2020, when we will have to equalise every time there is a change of government in this place?

Nicholas Clegg: We will, of course, publish the financial implications. The hon. Lady is right to highlight an issue that has not been given sufficient attention—how unsustainable the status quo is. Are people really comfortable with a second Chamber that will soon be composed of 1,000 or more members, in which more than 70% are there through nothing more than political patronage and in which they receive £300 tax-free just for turning up?

Angus MacNeil: Given that the House of Lords is often seen as a lifeboat for ailing political careers, so that there are vested interests in this place that are very much against reform, will the Deputy Prime Minister lead by example and guarantee that, in the event of his attempts at reform being unsuccessful, he will not take up a seat in the Lords?

Nicholas Clegg: I certainly hope that my reform proposals will be successful.

Mr Speaker: I call Mr Peter Bone.

Peter Bone: Mr. Speaker, we have a—[Interruption.]

Mr Speaker: Order. The House needs to hear Mr Bone.

Peter Bone: Thank you, Mr Speaker. We have a very courageous Deputy Prime Minister, and may I urge him to continue with House of Lords reform, because he will be a national hero to the 8% who vote Liberal Democrat? On accountability, will he promise that there will be no programme motion so that this House can fully discuss these major constitutional reforms?

Nicholas Clegg: Ample time will be allowed, but we should keep this in proportion. This is not something that the vast majority of people in the country care about a great deal. That does not mean that the Government cannot do more than one thing at once, and I have to say to those, perhaps including the hon. Gentleman, who want to block up all parliamentary business because they object to this simple reform that the burden is on them to explain why they want to protect an unsustainable and indefensible status quo.

Topical Questions

Ann McKechin: If he will make a statement on his departmental responsibilities.

Nicholas Clegg: As Deputy Prime Minister, I support the Prime Minister on the full range of Government policies and initiatives. I take special responsibility for the Government’s programme of political and constitutional reform, including reform of party funding. Let me briefly update the House on that issue. I wrote to party leaders in February asking them to nominate representatives for cross-party discussions on party funding. Meetings took place on 11 and 30 April. Representatives are meeting again today, and will hold a further discussion next week.
	We all know the parameters. This is not about reinventing the wheel. The Kelly report provides a sound basis for agreement. We simply need to demonstrate the political will to make progress, and I hope and expect that to be possible before the summer recess.

Ann McKechin: This week the Deputy Prime Minister spoke of the wasted talent in the country caused by the lack of social mobility, and I concur with his comments. However, given the direct link between poverty and some of the indicators that he will be using, such as birth weight, why are the Government pursuing cuts in tax credits and benefits, which will simply lead to more children living below the poverty line?

Nicholas Clegg: As the hon. Lady knows, our welfare reforms are based on the simple principle of ensuring that work always pays. That is what these controversial reforms are about, and that is what universal credit is about. For years and years under Labour the welfare budget ballooned and the incentive to work diminished. That is what we are seeking to change through our welfare reforms.

Anna Soubry: People in Broxtowe will have been pleased by today’s news that inflation has come down. What other measures does the Deputy Prime Minister think the Government should be taking to help hard-pressed families throughout the country?

Nicholas Clegg: I think it is significant that in one week we have seen the release of official statistics showing that both unemployment and inflation are down, and today we have heard from the IMF that the policy prescription that we are pursuing is exactly the right one to repair the mess left by the Labour party. There are many reforms that we need to introduce, but one that I would highlight is a simpler, fairer tax system.
	Because of the tax reforms that we have introduced, as of next April more than 2 million people with low earnings will be paying no income tax whatsoever.

Harriet Harman: It has been a bad week for the Germans. First they are beaten by Chelsea, and then they get an economics lecture from the Deputy Prime Minister. Can he tell us why he is qualified to lecture anyone about economic policy when his Government have left us with a double-dip recession and 1 million young people looking for work?

Nicholas Clegg: The right hon. and learned Lady must be suffering from amnesia. Does she not remember how her Government sucked up to the City of London, went on a prawn cocktail offensive which let the banks off the hook and presided over increases in youth unemployment year after year after 2004, the biggest peacetime deficit ever seen in this country, and the largest decline in manufacturing—even larger than the decline in the 1980s? That is Labour’s record, and I am proud of the fact that we are trying to fix the mess that she left behind.

Harriet Harman: When we left office, the economy was growing and unemployment was falling. Today the Deputy Prime Minister has been prancing around preaching about social mobility, which is frankly ludicrous when he is cutting tax credits for low-income families, providing a tax cut for millionaires, and scrapping an important measure designed to narrow the gap between rich and poor, namely clause 1 of the Equality Act 2010. It is always the same with this Deputy Prime Minister: he says one thing and does another. For all the difference that he makes in Government, he might as well be chillaxing or beating his own record at Fruit Ninja.

Nicholas Clegg: That was laboured even by the standards of the right hon. and learned Lady. She referred to the upper rate of income tax, and she is ranting and railing against the new 45p rate that we will introduce next April. Perhaps she can answer a simple question. Why did the Labour party maintain a lower tax rate of 40p in the pound for upper-rate earners for the 12 years and 11 months for which they were in office? I know that the right hon. and learned Lady does not like the 45p rate; perhaps she wants to advocate the rate that she maintained for most of her time in office.
	Just today, Christine Lagarde of the International Monetary Fund that
	“when I think back myself to May 2010, when the UK deficit was at 11%”
	—that was Labour’s gift to us—
	“and I try to imagine what the situation would be like today if no such fiscal consolidation programme had been decided…I shiver”.
	That is a judgment on the legacy of the right hon. and learned Lady.

Several hon. Members: rose—

Mr Speaker: Order. We need brief questions and brief answers.

Rehman Chishti: Can the Deputy Prime Minister confirm that House of Lords reform was in the manifestos of all three main
	political parties, and does he agree that it is absolutely right and proper that politicians should now keep to their promise and enact this much-needed reform?

Nicholas Clegg: Yes, I strongly agree that, as I have said, we should just get on with reforming the House of Lords with the minimum of fuss. I ask those who want to hold the whole of Government and parliamentary business hostage on this matter why on earth they think it is such a priority for the country that that business should be brought to a standstill. Given those manifesto commitments, we should work on a cross-party basis to finally complete reform of the House of Lords.

Mr Speaker: Barry Gardiner. Not here. I call Kate Green.

Kate Green: I did not hear the Deputy Prime Minister say anything about ethnic inequalities in his speech on social mobility this morning, yet black youth unemployment is twice that of white British young people, ethnic minorities are under-represented in apprenticeships and although increasing numbers are entering higher education, they are more likely to attend less prestigious universities. If the Deputy Prime Minister is serious about social mobility, does he agree that we need targeted policies to address ethnic inequalities in education and employment?

Nicholas Clegg: I certainly agree with the hon. Lady’s characterisation of the problem for many young people in our black and minority ethnic communities. It is one of the reasons why I have commissioned some work to look at the strong anecdotal evidence that it seems to be harder for young black and minority ethnic entrepreneurs to secure loans from banks on the same reasonable rates as others. That is just one issue among many that we need to address. However, I draw the hon. Lady’s attention to the fact that the targeted interventions that we are delivering—£8 billion on pre-school support for two, three and four-year-olds, a new free pre-school support package for all disadvantaged two-year-olds as of April next year, the pupil premium and so on —disproportionately benefit those who are disadvantaged in the communities to which she refers.

Graham Evans: Last week we had some fantastic news: 700 new jobs at Ellesmere Port Vauxhall factory, making the new generation of Astras. Does the Deputy Prime Minister agree that that is a fantastic example of how flexible working can help rebalance the economy in the United Kingdom?

Nicholas Clegg: I strongly agree. That was a very important moment, as it underlines something that has been quietly building for some time: a real return to form for British manufacturing. The fact that as a country we are now exporting more cars than we are importing for the first time since the 1970s shows that, notwithstanding all the anxieties and concerns about the economic situation generally, this is an area of emerging strength for Britain.

Grahame Morris: May I refer the Deputy Prime Minister to an answer he gave a few moments ago, and ask whether he is aware that
	figures have been placed in the House of Commons Library this morning showing that public sector debt has risen from £12,500 per head in May 2010 to £16,200 per head in April 2012? Is this figure—
	[Interruption.] 
	It’s higher. Is this higher figure a result of the Deputy Prime Minister having taken his eye off the ball by concentrating on Lords reform instead of getting on with jobs and growth and getting our 1 million young people back to work?

Nicholas Clegg: The reason for those figures is the shocking state of the public finances left by Labour. Today’s IMF report very precisely identified three reasons why the British economy still faces real headwinds: first, increasing global commodity prices last year, which was not something we could control; secondly, the uncertainties of the eurozone, which is also not under our control; and thirdly, the hangover of monumental public and private debt, which was, indeed, a debt crisis made in No. 10—the No. 10 of Gordon Brown, aided and abetted by the backroom boys, the current Labour leader and shadow Chancellor. It is they who created the crisis in the first place.

Fiona Bruce: Does the right hon. Gentleman agree that proceeding urgently and with vigour on the reform of political party funding is a matter of fairness and justice?

Nicholas Clegg: We all know that that is a problem for all political parties. The controversies and scandals about party funding, the opaque way in which it is organised and the imperfect way in which political parties are held to account has damaged all political parties. That is why it is overwhelmingly in our shared interest to come to an agreement. As I said earlier, it is merely a matter of political will. The Kelly committee has show in outline what the bare bones of an agreement should look like and I hope that we will now be able to reach one.

Huw Irranca-Davies: The Government have been taking a bit of a “pastying” in the west country recently and, as a result, we are told that the Deputy Prime Minister is listening—at least to the voices of his own MPs in panic. Will he also listen to the voices of Welsh workers at Talgarth Bakery, the Old Parish Bakery, Ferrari’s, Pin-it Pastry, Jenkins the Bakers and Peter’s pies and make a hasty—or should that be a “pastry”—retreat on the pasty tax?

Nicholas Clegg: That is Christmas cracker stuff from the hon. Gentleman. As I said earlier, we have extended the period of consultation on that issue. I recognise the strength of feeling about the issue from him and from many Members on both sides of the House. We have listened very closely to the representations of many figures in the industry and I hope that we will be able to make proposals shortly.

Martin Horwood: On 10 May, Rosehill street in Cheltenham was devastated by a major gas explosion. Within 24 hours, 600 residents of Hatherley in my constituency had also been evacuated following a police explosives alert. Will the Deputy Prime Minister join me in congratulating the emergency services, the council and residents on their response to that unprecedented
	combination of emergencies and send a letter of special support to the jubilee street party in Rosehill street, which is going ahead anyway in a great show—

Mr Speaker: Order. We are grateful to the hon. Gentleman. I do not want to guide the Deputy Prime Minister unduly, but I should say that there is no violation of parliamentary rules in offering the House an answer that consists of a yes or a no.

Nicholas Clegg: Yes.

Bridget Phillipson: Last week, the Deputy Prime Minister said:
	“There is going to be no regional pay system. That is not going to happen.”
	Are not his Government drawing up plans for precisely such a system?

Nicholas Clegg: No.

Zac Goldsmith: Will the Deputy Prime Minister reassure the House that there was no reference to recall in the Queen’s Speech because it has been sent back for a much-needed redraft and not because it has been dumped altogether?

Nicholas Clegg: As my hon. Friend will know, the Select Committee is still carrying out its inquiry on recall. I know that he recently gave evidence to the Committee on the subject and, in keeping with our approach to many other items on the constitutional reform agenda, we are keen to gather views and consult widely before we produce draft legislation.

Kerry McCarthy: The Deputy Prime Minister will know that Bristol has decided that it wants an elected mayor. Will he support the official Liberal Democrat candidate or the man who has just resigned his Liberal Democrat membership after 25 years because he thinks that being outed as a Lib Dem will sound the death knell for his political ambitions and is therefore standing as an independent?

Nicholas Clegg: I think the hon. Lady was trying to be stinging, funny or both, but I could not quite work out what the question was. It is up to the Liberal Democrats in Bristol, as it is to all political parties, to decide how to put forward candidates for mayoral elections.

Philip Davies: Given the allegations of voting fraud in certain parts of the country, including in Bradford in my part of the world, will the Deputy Prime Minister explain why photo ID should not be required before people are allowed to vote?

Nicholas Clegg: In deciding the new individual voter registration system, with which we are proceeding with, I hope, cross-party support, we have looked exhaustively at the checks we consider necessary to bear down on fraud in the electoral system. That is the whole point of individual voter registration and it was right that the Government brought forward the timetable we inherited from the previous Government so that it is introduced sooner rather than later.

Stephen Timms: Given the slow progress with the related legislation, will the Deputy Prime Minister tell us what share of the lobbying market is accounted for by companies that did not register with the UK Public Affairs Council? What will the penalty be for those companies that do not co-operate with the Government’s proposed statutory register?

Nicholas Clegg: I am afraid that I cannot give the right hon. Gentleman the statistic he asks for, but I will look into it and see whether I can provide it later. On his second point, we are consulting right now on that exact issue of penalties and sanctions.

John Stevenson: If we are going to give more power to the electorate by removing privilege and patronage from a reformed House of Lords and giving voters the power of election, will the Minister confirm that there is no compelling reason for a referendum?

Nicholas Clegg: I am personally unpersuaded that we should waste £100 million of taxpayers’ money on an issue on which, unlike with electoral reform of this place, there is cross-party consensus, with manifesto commitments to reform from all three parties. I would take seriously advice from all those critics who say that we should not proceed with House of Lords reform at all. They claim that it is not an issue of significance to the British public, so I do not think we should waste a great deal of the public’s money on a referendum when we all, nominally at least, agree that this reform should happen.

Sheila Gilmore: The Deputy Prime Minister has been quoted in the media as saying, rightly in my opinion, that social mobility will take a long time to change, so why, on coming to power in May 2010, did he agree to the reduction or elimination of measures such as the education maintenance allowance and Sure Start long before their long-term effects could be judged?[Official Report, 24 May 2012, Vol. 545, c. 15-16MC.]

Nicholas Clegg: As I hope the hon. Lady knows, we have protected the money for Sure Start, but there is, I acknowledge, greater discretion for local authorities to decide how to use it. I am aware of 10 outright closures of Sure Start centres across the country, and of course it is important to know why local authorities have taken those decisions. I hope that she is also aware of the extra investment that we are now putting in, particularly for early years—for children even before they go to school. We know from the evidence that that makes the most dramatic difference for subsequent social mobility. As of April next year, 40% of all two-year-olds in this country, including all two-year-olds from the most disadvantaged families, will receive for the first time 15 hours of free pre-school support.

Philip Hollobone: Should there not be a civic duty on everyone to ensure they are on their local electoral register, and should that not be backed up by an enforcement system of civil penalties for those who do not?

Nicholas Clegg: Absolutely. We listened to many representations on this point when we considered what should be included in the Bill on individual voter
	registration and we have indeed, as I hope he has noticed, included a civil penalty to ensure that the civic duty to register to vote is properly maintained.

Dan Jarvis: Following on from the G8 summit at the weekend, may I ask the Deputy Prime Minister how the plan to support the Afghan Government after 2014 will have the slightest prospect of success without real progress on problems of politics and governance, which, according to almost all reports, have got worse, not better, in recent years?

Nicholas Clegg: The hon. Gentleman makes a very serious point. Anybody who has visited Afghanistan or examined the conflict there will know that there was never any prospect of a military solution alone. In a sense, all that military intervention can do is create the space in which social and political stability can take root. I share his concerns that we are still some way from that. It is immensely important at this stage, as we are moving towards real transition in Afghanistan, that we include other countries in the region, notably Pakistan, so that they play their full part and bring their influence to bear in order that political stability can indeed take root in Afghanistan.

Stephen Williams: My right hon. Friend the Deputy Prime Minister mentioned in his speech this morning plotting the advances made by children on free school meals. Some of the schools in my constituency have more than 50% of pupils on free school meals. Will he undertake to increase the value of the pupil premium over the life of this Parliament so that the schools already making huge progress can build on their achievements so far?

Nicholas Clegg: The pupil premium is currently worth £1.25 billion, and that will double to £2.5 billion by the end of this Parliament. That is additional money on top of the baseline funding provided to schools. Last year, on a per pupil basis, the pupil premium was worth about £480. It is now worth £600 and will go on to increase. Given those statistics, it is remarkable that Labour in Manchester voted to scrap the pupil premium altogether. How on earth is that going to help social mobility?

Hazel Blears: In his speech on social mobility this morning, the Deputy Prime Minister said:
	“It is my strongest political conviction that…if we have a chance to open up success to all, we must seize it.”
	What is he going to do to put an end to the scandal of unpaid internships, particularly in politics, the media and our creative industries?

Nicholas Clegg: I pay tribute to the right hon. Lady’s work on internships, not least in this place as part of the Speaker’s Panel. As she knows, the legislation is clear: if an intern is, in effect, doing work that should be remunerated, he or she should be remunerated. There are cases of interns doing work that falls outside that legal definition. Having looked closely at the issue, and she and I have corresponded on this, we have decided that it could be self-defeating if we sought to outlaw altogether across the piece—not least, for instance,
	in charities—some unpaid internships. I agree, however, that even in those cases, it is incredibly important to ensure that internships are available to everybody, and that basic costs, such as travel costs and lunch costs, are properly covered, even in those cases.

David Nuttall: When are we going to stop the constitutional scandal that, because of devolution, Scottish MPs can vote on legislation that affects my constituents but does not affect their own constituents?

Nicholas Clegg: As the hon. Gentleman may know, the McKay Commission, established to look into the so-called West Lothian problem, is doing its work and will report by the end of the Session. I urge him to give evidence to that commission, perhaps, and certainly to follow its work closely.

Several hon. Members: rose—

Mr Speaker: Order. I am sorry to disappoint colleagues who have been standing. I say in a spirit of impartiality that the Deputy Prime Minister is box office. Lots of people want to ask questions and, sadly, there is not time to accommodate them all, but the right hon. Gentleman will return to his slot ere long, and colleagues can doubtless reheat their questions.

ATTORNEY-GENERAL

The Attorney-General was asked—

Human Trafficking (Prosecutions)

Peter Bone: How many prosecutions the Crown Prosecution Service brought for human trafficking in the last 12 months.

Keith Vaz: What steps he is taking to increase the number of prosecutions for human trafficking.

Dominic Grieve: The Crown Prosecution Service has charged and prosecuted 133 offences of human trafficking in the past 12 months, 1 May 2011 to 30 April 2012. The CPS prosecutes human trafficking-related cases under other legislation as well. The CPS is taking a number of steps to increase prosecutions, but is dependent on cases being referred for investigation by law enforcement agencies.

Peter Bone: We have another Minister at the Dispatch Box who is also box office. May I encourage him to look at the problem where police spend time, money and effort breaking up criminal gangs of human traffickers, only for the CPS to charge them with much lesser offences, getting shorter sentences that are no deterrent to the human traffickers? It is essential that we prosecute people for human trafficking. What can the Attorney-General do?

Dominic Grieve: I agree entirely with my hon. Friend that it is important that the right offences should be prosecuted, and if he wishes to draw to my attention instances where he feels that has not happened, I am always prepared to take the matter up. It is also right to point out that in deciding how to prosecute, the Crown Prosecution Service will look very carefully at all the surrounding issues, including sometimes the vulnerability of the offender, and may on occasion consider that the best way in which the public interest can be served is in prosecuting a lesser offence, but the principle must always be that the offence charged and prosecuted should meet the gravity of the crime.

Keith Vaz: I agree with the hon. Member for Wellingborough (Mr Bone) and pay tribute to him for the work he does in this area. Some 100,000 people are trafficked around Europe every year. This is a cross-border crime that requires cross-border co-operation. What steps is the Attorney-General taking through the Crown Prosecution Service and the Metropolitan police to work with Interpol and Europol to find the perpetrators of this cross-border crime and make sure that they are brought to justice? It must be done on an international basis.

Dominic Grieve: I agree entirely with the right hon. Gentleman. It is indeed an international crime. Within the European Union there are CPS liaison magistrates in other countries, the European Judicial Network contacts, the Serious Organised Crime Agency liaison officers and Eurojust to assist. Outside the EU the position is more complicated, but we have some liaison CPS working in a number of countries with which we have particular important links. The right hon. Gentleman will be aware that under the Protection of Freedoms Act 2012, the extraterritoriality provisions provided for in EU directives have been implemented, although they have not yet been brought into operation, so that these offences can now be prosecuted here even if they were committed abroad. Ultimately, the CPS will be dependent on the evidence produced to it. That will come from the police or SOCA, and for those reasons, the CPS, while doing its best, will always continue to be dependent on the quality of the information it gets.

Tom Brake: Does the Attorney-General agree that just as the CPS must increase the number of prosecutions against people guilty of human trafficking, it must also stop prosecuting those who have been trafficked, such as in the case of AVN?

Dominic Grieve: Yes, I agree entirely with the right hon. Gentleman. As he knows, the CPS has a process in operation, which has been echoed by the Home Office, to provide protection for those who have been trafficked. He will also be aware that, with the encouragement of all political parties, the previous Government signed up to providing protection against deportation for those who had been trafficked.

William McCrea: As the tragedy of human trafficking crosses all regions of the United Kingdom, what recent discussions have been held with the devolved Administrations?

Dominic Grieve: I agree entirely with the hon. Gentleman. The best thing I can do is write to him. I am perfectly aware that the CPS liaises extensively with the CPS in Northern Ireland and the Lord Advocate’s Department in Scotland, and I will provide him with that information.

Rape Allegations

Yvonne Fovargue: If he will take steps to increase the public profile of the work of the Crown Prosecution Service on allegations of rape made by young women.

Edward Garnier: The CPS and the specialist rape and serious sexual offences teams in every CPS area take all allegations of rape against every age group very seriously, and as a matter of general principle are keen that their work should be given the highest possible public profile. That said, they and the police have to make a judgment in each case about whether and to what extent to give publicity to it pre-trial, because quite apart from the laws of contempt and those prohibiting the identification of victims, the victim is entitled to be spared as much as possible any additional trauma beyond that caused by the rape itself.

Yvonne Fovargue: The conviction last month of Kabeer Hassan and another man for rape and conspiracy to engage in sexual activity with a child calls into question the original CPS decision not to charge the men because the young woman was deemed not to be a credible witness. Does the Solicitor-General share my concern that the CPS’s original decision sends out a very dangerous message to other young victims of rape that they will not be believed?

Edward Garnier: If there is any good news to be had out of that terrible case, it is that the chief Crown prosecutor for the north-west, Mr. Nazir Afzal, revisited that decision, overturned it and ensured that the defendants were prosecuted, and prosecuted to conviction. I hope that the hon. Lady will be pleased by the result of that case.

Helen Grant: Does the Solicitor-General agree that the increased number of rape crisis centres opened by the Government helped to increase the number of rape prosecutions?

Edward Garnier: Yes. It will be one of the many factors that have done so, and I hope that we will see them being better used and with greater efficiency in future.

David Burrowes: The Solicitor-General will be aware that high profile cases often attract resource and, in particular, early involvement of the prosecution. Can he ensure that victims of rape get similar attention and profile?

Edward Garnier: Yes, I can. The specialist rape prosecuting teams and the specially trained police officers, as well as witness care units run by the CPS, are now working well together to ensure that rape victims receive the proper treatment they need.

Forced Marriage (Prosecutions)

Stephen Hepburn: What recent assessment he has made of the effectiveness of prosecutions for forced marriage.

Edward Garnier: None personally, but the Home Office recently concluded its public consultation on forced marriage and the Prime Minister has announced our intention to sign the Council of Europe’s convention on preventing and combating violence against women and domestic violence, which will require us to criminalise forced marriage. Currently, in this jurisdiction there is no specific crime of forced marriage, and offences within that term are prosecuted under, for example, the Offences Against the Person Act 1861, the Sexual Offences Act 2003, or other suitable statutes.

Stephen Hepburn: Every year in this country, thousands of children are subjected to the cruelty of forced marriage. The Government are quite right in what they say and they will act against this, but nothing at all was mentioned in the Queen’s Speech. Can the Solicitor-General tell us exactly when we will have a Bill in this House so that we can outlaw this barbaric practice 100%?

Edward Garnier: No, I cannot say precisely when we will have a Bill to outlaw this barbaric practice, but I can assure him that our signing of the convention will lead inexorably in that direction.

Bob Blackman: Can my hon. and learned Friend inform the House what penalties are envisaged for this terrible crime once it is made a criminal offence?

Edward Garnier: No, but the penalties will be quite severe. The only guidance I can give my hon. Friend is to look at the penalties imposed under existing convictions. For example, last year there were 42 prosecutions for forced marriage under the various statutes I have referred to, a number of which led to quite lengthy sentences.

Crown Prosecution Service Employees (York)

Hugh Bayley: How many employees the Crown Prosecution Service has at (a) Athena house, York and (b) other locations in York.

Dominic Grieve: The Crown Prosecution Service has 65 employees at Athena house and 125 staff based at United house in York.

Hugh Bayley: Has the CPS consulted North Yorkshire police and the courts in York and Selby on the impact of moving staff from Athena house on administrative costs for those two bodies? If the staff have to be moved from Athena house, would not it be practical to relocate them to the offices in central York where the other York-based CPS staff are based?

Dominic Grieve: Yes. As the hon. Gentleman might be aware, a consultation is taking place. An informal consultation procedure has now ended and a formal consultation procedure on any final decision on
	Athena house will follow. The argument for relocating a large part of the casework units to Leeds, in my judgment, cannot be argued against because, with the reduction in numbers resulting from the savings that have to be made, maintaining critical mass and having a regional hub makes sense, but I would like to reassure him that the need to maintain a presence in York is also accepted, because of its importance as the headquarters of North Yorkshire.

Anne Main: rose —

Mr Speaker: Order. If the hon. Lady’s intended supplementary question refers to York, it will be in order. If it does not, it will not.

Anne Main: Staffing numbers are a huge concern in the CPS. Will the Solicitor-General meet me to discuss what impact that might have had on the case of Mrs Swarnapali Timmann, who is concerned—

Mr Speaker: Order. Does the question relate to York or other locations in York?

Anne Main: It may do.

Mr Speaker: And it may not. The hon. Lady has got her point on the record, but it requires no answer. [ Laughter. ] I am glad that the House is in such a good mood.

Interpreters (Prosecutions)

Nicholas Dakin: If he will assess the effect on the cost of prosecutions of delays caused by the absence of an interpreter.

Edward Garnier: The CPS has no central records on the cost of court delays caused by the absence of an interpreter, but common sense tells me that such delays resulting from the absence of a necessary interpreter waste time and money.

Nicholas Dakin: Apparently, Jajo the rabbit is now a registered interpreter and translator. Does the Solicitor-General agree that that latest embarrassment illustrates the utter shambles that the contracting out of the interpreter and translator service has become?

Edward Garnier: It was a joke and, even if it was not a joke, he has been deregistered.

Alan Beith: What discussions is the Solicitor-General having with his colleagues in the Ministry of Justice to ensure that the contract provisions are carefully examined and, if necessary, penalties are imposed if the service is not up to the standard required?

Edward Garnier: I am grateful to my right hon. Friend. I discussed that matter only this morning with colleagues in the Ministry of Justice and am assured by the Under-Secretary of State for Justice, my hon. Friend the Member for Reigate (Mr Blunt), that the contract with Applied Language Solutions is now running properly. The company has got a grip on it and we can expect nothing but progress from here on.

Mr Speaker: So that we get the full benefit of the Solicitor-General’s eloquence, perhaps he could—

Edward Garnier: Shall I repeat the answer?

Mr Speaker: I do not think that that will be necessary, but perhaps in future the hon. and learned Gentleman would face the House. We would all be greatly obliged.

Andy Slaughter: It is my pleasure to stand in for the shadow Attorney-General, my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry)—I understand that she has informed the Attorney-General, if not the Solicitor-General. Reports from the media, the courts and interpreters themselves show that, contrary to the Solicitor-General’s briefing, problems with ALS are getting worse, not better. The MOJ intends to publish its analysis of ALS’s performance this week, based on data that I understand were collected by ALS itself. Will the Law Officers conduct their own investigation of the collapse of the interpreting and translating service in our courts, one that will put the interests of justice before the self-serving interests of the Ministry of Justice and its contractor?

Edward Garnier: No, I genuinely do not believe that to be necessary, and I think that the hon. Gentleman has been misinformed. The ALS contract is working well. If he knows of any particular instances where it is not, no doubt he will tell the Ministry of Justice about them, but I think I am prepared to believe my hon. Friends in the MOJ a little bit before I believe him.

Stephen Phillips: What mechanisms exist for the CPS to communicate concerns with regard to the quality of interpretation both to the Law Officers and, indeed, to the Ministry of Justice?

Edward Garnier: The CPS can tell us; my hon. and learned Friend can tell us; he can tell the Ministry of Justice; we can tell the Ministry of Justice—[ Interruption. ]

Mr Speaker: The demeanour of the Solicitor-General is eccentric. I cannot account for how he performs in Her Majesty’s courts, but in the Chamber it would be helpful if he looked in the direction of the generality of Members.

Police (Criminal Allegations)

Ann Clwyd: What recent discussions he has had with the Director of Public Prosecutions on the Crown Prosecution Service’s handling of criminal allegations against police.

Dominic Grieve: I agree that allegations against police officers must be taken very seriously, and I have had discussions with the Director of Public Prosecutions about the Crown Prosecution Service’s handling of criminal allegations against the police. Any such cases are handled, as with any other
	case, by CPS prosecutors, who are independent of the police, applying the code for Crown Prosecutors.

Ann Clwyd: As the Attorney-General knows, the case of Lynette White in south Wales, which involved bringing eight former South Wales police officers to court after 10 years on charges of perverting the course of justice, collapsed and is now the subject of two inquiries. Can he give us some idea of when they are likely to report?

Dominic Grieve: I am afraid that I am not in a position to give the right hon. Lady those details, but I will see whether subsequently I can supply her with further information. I entirely agree that the case revealed some very worrying features indeed, and I can assure her that the Director of Public Prosecutions takes those aspects very seriously and wishes to get to the bottom of them. I have no doubt that we will be better informed when we have those reports.

Serious Fraud Office

Grahame Morris: What recent discussions he has had with the Director of the Serious Fraud Office about the future of that organisation.

Edward Garnier: I have had many, both with the new director, Mr David Green, and with his predecessor, Mr Richard Alderman. The SFO has a bright future.

Grahame Morris: In view of the really bad press that the Serious Fraud Office has been getting of late, has the Solicitor-General had an opportunity to consider the failure of the Department for Work and Pensions properly to assess the risk of fraud at A4e and, in particular, to obtain key evidence relating to internal audit documents, as identified by the National Audit Office this week? Does he believe that there is a role for the SFO in providing specialist help to Departments?

Edward Garnier: No, the Serious Fraud Office has a remit to deal with high-end fraud, international fraud and corruption. The work of the Department for Work and Pensions is a matter for the Department for Work and Pensions.

Robert Buckland: Without going into specific case details, I must ask: does not recent adverse publicity about the incompetence of the Serious Fraud Office call into question the integrity of fraud investigation in our country? Is it not a matter of utmost importance that we should address urgently?

Edward Garnier: Although, with the greatest respect, I do not entirely accept the premise of all my hon. Friend’s question, I can assure him that the Serious Fraud Office is pursuing investigations and prosecutions with competence and vigour. I appreciate that Lord Justice Thomas has had some interesting things to say about the SFO in a current case, upon which I shall not comment further.

Point of Order

Denis MacShane: On a point of order, Mr Speaker. In Deputy Prime Minister’s questions, there was an exchange about something called a Fruit Ninja. Sir, I do not know whether you know what a Fruit Ninja is, or whether it is a parliamentary expression as defined by “Erskine May”, but, given that apparently the Prime Minister spends an awful lot of time with one, can we all be given one so that we can understand what he is up to?

Mr Speaker: Well, I plead ignorance myself. I am not familiar with the thing or practice concerned, but I am comforted by the knowledge that I share that ignorance with one so learned as the right hon. Member for Rotherham (Mr MacShane). Sadly, his intervention, whatever its merits, did not constitute a point of order.

Privilege

Mr Speaker: We come now to the main business. As I advised the House yesterday, the hon. Member for Maldon (Mr Whittingdale) has tabled a motion for debate on a matter of privilege which I have agreed should take precedence today. To move the motion, I call Mr John Whittingdale.

John Whittingdale: I beg to move,
	That this House notes the conclusions set out in chapter 8 of the Eleventh Report from the Culture, Media and Sport Committee, Session 2010-12, on News International and Phone-hacking, HC 903-I and orders that the matter be referred to the Committee on Standards and Privileges.
	Let me begin, Mr Speaker, by thanking you for granting precedence to this motion, which I move on behalf of all the members of the Culture, Media and Sport Committee. I am aware that the motion is unusual, if not almost unprecedented in modern times, but as the Committee set out in the conclusions to our report, we believe that the integrity and effectiveness of Select Committees relies on the evidence that we are given being given truthfully and completely. We therefore regard the finding of the Committee that we were misled by specific individuals as an extremely serious matter, and we think it only right that it should be brought to the attention of the whole House of Commons and referred to the Committee on Standards and Privileges. I apologise for throwing this hot potato into the lap of the right hon. Member for Rother Valley (Mr Barron), but I think that it is important that his Committee consider this matter, first, to establish whether my Committee was indeed misled in the evidence that it was given; and secondly, to deal with the perhaps rather more difficult question of what Parliament should do in response.
	It might help the House if I briefly describe the events that have led to this afternoon’s debate. At the beginning of 2007, the Culture, Media and Sport Committee decided to hold an inquiry into the self-regulation of the press. Three events triggered that decision. The first was the harassment of Kate Middleton —then a commoner, now the Duchess of Cambridge—that was taking place, which was felt to go well beyond what was acceptable.
	The second issue was the publication by the Information Commissioner of his report “What price privacy now?”, at the end of 2006. In that report, he published details of the very large number of journalists working for a wide variety of publications who had employed the services of Steve Whittamore, a private investigator who was subsequently convicted for illegally breaching the police national computer and the driver vehicle licensing database in order to obtain information. Although no prosecutions of the journalists were brought, there was certainly a widespread suspicion that many members of the press had been involved in what appeared to have been illegal activity.
	The third matter that the Committee decided we needed to consider was the conviction, just a few months previously, of Clive Goodman, the royal editor of the News of the World, and Glenn Mulcaire, a private
	investigator, who were found to have conspired to intercept communications without lawful authority. On that third specific issue, the Committee took evidence from the then chairman of News International, Mr Les Hinton. During our evidence, I put this question to him:
	“You carried out a full, rigorous internal inquiry, and you are absolutely convinced that Clive Goodman was the only person who knew what was going on?”
	Mr Hinton replied:
	“Yes, we have and I believe he was the only person, but that investigation, under the new editor, continues.”
	In the absence of any evidence to the contrary, the Committee had to accept the assurance that we were given, but we did make some fairly strong comments about the culture that had allowed payments to be made by Clive Goodman without any apparent authority from the management of News International. However, although we concluded that we had not seen evidence that proved otherwise, I think we all heard alarm bells ringing, since we were very much aware that Glenn Mulcaire had been convicted of hacking into the telephone voice messages of Mr Max Clifford, Mr Sky Andrew, Mr Gordon Taylor, Ms Elle Macpherson, and the right hon. Member for Bermondsey and Old Southwark (Simon Hughes), none of whom had any obvious connection with the royal family. Yet we were told that the only person at the News of the World who had any knowledge or involvement was the royal editor. There was therefore certainly a suspicion in our minds that the phone hacking may have gone much wider than we were led to believe.
	During 2009, two years later, the Committee conducted an inquiry into press standards, privacy and libel. During that inquiry, in July 2009, The Guardian reported that News Group Newspapers had paid more than £1 million to settle privacy cases that had been brought by Gordon Taylor, one of those on the charge sheet for Glenn Mulcaire, and by Jo Armstrong and a lawyer, all of whom were involved in football matters. We decided that the size of that settlement was so large that it cast doubt on the previous testimony that we had received. On that basis, we decided to reopen our inquiry.
	That decision, and certainly the report that appeared in The Guardian, was vigorously attacked by News International to such an extent that when we summoned the editor of The Guardian and the journalist who had written the story, Mr Nick Davies, to appear before us, they responded by providing the Committee with certain documents. In particular, there was a contract between Glenn Mulcaire, the private investigator, and Greg Miskiw, a senior executive on the News of the World, and also what has become known as the “For Neville” e-mail. That was a heavily redacted transcript of an exchange that took place between Gordon Taylor and Jo Armstrong on their voicemails.
	To us, that clearly suggested that others had been involved. We therefore took evidence during the course of our inquiry in 2009 from quite a number of senior executives of News International, including Tom Crone, the legal manager; Colin Myler, the then editor of the News of the World; Andy Coulson, the previous editor of the News of the World; Stuart Kuttner, the managing editor; and Les Hinton, the executive chairman. Mr Crone told us that he had become aware of the e-mail in April 2008, but in his evidence to us he suggested that an investigation had found little real evidence that it had
	gone any further. His implication was certainly that it did not amount to much. As we commented in our report:
	“In summary, Mr Crone’s investigation, he said, had established that nobody remembered the ‘for Neville’ email, apart from Mr Hindley”—
	the journalist who taken the transcription—
	“who could not remember what he did with it.”
	We went on to note:
	“In spite of the allegations contained in the Guardian, the News of the World has continued to assert that Clive Goodman acted alone. Les Hinton, the former Executive Chairman of News International, told us: ‘There was never any evidence delivered to me that suggested that the conduct of Clive Goodman spread beyond him.’”

Simon Hughes: I thank the hon. Gentleman not just for his work and that of his Committee but for the measured way in which he is putting the case.
	May I make it quite clear—this is in the public domain, so I am not breaching any prospective prosecutions —that there was substantial evidence, at all material times soon after the arrest of the two people who were subsequently convicted, that a series of other people at higher levels in the same newspaper had been involved, because they had been told what was going on? That is now in the public domain, and some of us believe that that knowledge cannot have been limited to those who were named in the documents seized by the police. It must have been held more widely.

John Whittingdale: I hope that the full facts will continue to emerge, not just through the work of the Committee but through that of Lord Justice Leveson and the police investigation and the possible charges to follow. I have to say that the Committee reached that conclusion in our work. Initially, it was suggested that the “For Neville” e-mail might have been going to any old Neville in the News of the World. We made inquiries and discovered that in fact there was only one person called Neville in the employment of the News of the World, and he was its chief reporter. Therefore, in 2009 the Committee concluded:
	“Evidence we have seen makes it inconceivable that no-one else at the News of the World, bar Clive Goodman, knew about the phone-hacking”.
	In relation to the previous assurance about the rigour of the inquiry, we said:
	“The newspaper’s enquiries were far from ‘full’ or ‘rigorous’, as we—and the PCC—had been assured. Throughout our inquiry, too, we have been struck by the collective amnesia afflicting witnesses from the News of the  World.”
	We published that report and nothing happened. It is perhaps a matter of regret that no further action was taken for another two years. However, evidence then started to emerge from the civil cases being brought by the victims of phone hacking, which led to the initiation of Operation Weeting—the police inquiry—and an Adjournment debate introduced by the hon. Member for Rhondda (Chris Bryant), in which he suggested that the Committee had been misled. Those events, plus the decision of James Murdoch to close the News of the World and to make a statement saying that the evidence and statements given to Parliament were wrong, caused the Committee to decide to reopen the inquiry.
	We took evidence from a wide range of people, including John Yates, then of the Metropolitan police, Rupert and James Murdoch, Rebekah Brooks, Jonathan Chapman, Daniel Cloke, Tom Crone, Colin Myler, Les Hinton and Julian Pike. We were assured at the time that News International was extremely keen to co-operate with the Committee and to establish the facts, but during the course of our subsequent inquiry three crucial documents emerged. It is worth noting that none were supplied to the Committee by News International, and that they actually came from various lawyers acting for the personalities involved.
	The first document was the letter sent in March 2007 by Clive Goodman to Les Hinton, the then chairman, objecting to his dismissal. The reason Clive Goodman gave for his objection to his dismissal was as follows:
	“This practice [phone hacking] was widely discussed in the daily editorial conference, until explicit reference to it was banned by the Editor. The legal manager, Tom Crone, attended virtually every meeting of my legal team and was given full access to the Crown Prosecution Service’s evidence files. He, and other senior staff of the paper, had long advanced knowledge that I would plead guilty.”
	The second document we obtained was an internal e-mail sent from Tom Crone to Colin Myler before a meeting with James Murdoch to discuss the terms of the settlement with Gordon Taylor. The e-mail states that
	“this evidence, particularly the e-mail”—
	the “For Neville” e-mail—
	“from the News of the World is fatal to our case.”
	Tom Crone went on to say:
	“Our position is very perilous. The damning e-mail is genuine and proves we actively made use of a large number of extremely private voicemails from Taylor’s telephone in June/July 2005 and that this was pursuant to a February 2005 contract.”
	Of course, that was written almost a year before Mr Crone appeared before the Committee and suggested that the “For Neville” e-mail was of no real significance because they could not remember where it had gone or find any record of it.
	The third document was the opinion obtained by Michael Silverleaf QC, who advised News Group Newspapers that it should reach a settlement because, as he said:
	“there is a powerful case that there is (or was) a culture of illegal information access used at News Group Newspapers in order to produce stories for publication.”
	The Committee, in its conclusions, comments on several specific issues that I will not go into in great detail, but they include such matters as the decision to authorise payments to Clive Goodman following his conviction; the importance of confidentiality in the size of the Gordon Taylor settlement; and the commissioning of surveillance of at least some members and former members of the Culture, Media and Sport Committee. These are matters that we describe in detail, and I hope that the Standards and Privileges Committee will also consider them.
	Our overall conclusion was that the evidence that we had obtained made it clear that the evidence given to us in our previous inquiry, when the individuals involved had once again attempted to assure us that there was no real suggestion or evidence that anyone else at the News of the World was involved in phone hacking other than
	Clive Goodman, was not true. They certainly did have documents that indicated very clearly that that was not the case. It was for that reason that the Committee concluded that we had been misled by Les Hinton, Tom Crone and Colin Myler—

Philip Davies: I commend my hon. Friend for the skilled way in which he has chaired the Committee over a long period, including during these very difficult inquiries, on which there was not always agreement. Will he just reiterate that, despite all the controversy over other parts of the report, on the chapter we are discussing today the Committee was united in finding that these people had misled the Committee, and there was no disagreement about any part of this chapter?

John Whittingdale: My hon. Friend is correct: on whether the three individuals whom I have just named misled the Committee we were unanimous in our finding. It is for that reason that I was very pleased that the Committee agreed to support the motion that I am moving.
	We took evidence from other individuals, and the Committee deliberately decided that we would reach no conclusion on the evidence given to us by people who have since been arrested and could face criminal charges. The Committee reserves the right to return to that question once proceedings are concluded, but the three individuals we identified have not been arrested, and we therefore felt it was right that we should draw the conclusions that we have and bring them to the attention of the House.
	We are under no illusion: these are serious matters. The conclusions we have reached bear profound consequences. I am not entirely clear what those consequences are, but there is no question but that these are very serious matters. It was also brought to our attention that those individuals should have a right to rebut the charges and to respond to them. We respected that, and we therefore felt that the right procedure was to refer the matter to the Standards and Privileges Committee, so that it had an opportunity to consider the evidence that led to our findings and to consider the responses that have already been given by two of the individuals named. On that basis, I ask the House to refer the Committee’s report and the evidence we received to the Standards and Privileges Committee.

Tom Watson: I support the hon. Member for Maldon (Mr Whittingdale) in his recommendations. These are very serious matters and they mark a parliamentary milestone in an investigation that began in 2003, when my hon. Friend the Member for Rhondda (Chris Bryant) asked the now infamous question about payments to the police. Furthermore, as the hon. Member for Maldon said, this marks the beginning of the end of the role of the Culture, Media and Sport Committee in this inquiry, although obviously we have reserved the right to return to the other arrested members of News International.
	The matter is not over for News Corporation, the police officers who failed to investigate properly back in 2006 or the computer hackers and other rogue private investigators who some evidence suggests played a wider role. There are other investigations going on, but for now it is important that the Committee is united and
	that the House unites to send this document to the Select Committee on Standards and Privileges. I am sure that other Committees will play a role, but we are united in ensuring that the three people named receive some form of parliamentary justice. The last thing we want to do is interfere with the process of criminal justice. I hope that the House can unite around the motion.

George Young: I want to make a short contribution and to begin by commending my hon. Friend the Member for Maldon (Mr Whittingdale) and his fellow members of the Culture, Media and Sport Committee for their painstaking and at times challenging inquiry into News International and phone hacking, building on the Committee’s work in the last Parliament. I thank them for their comprehensive report.
	The motion is a narrow one inviting us to note the conclusions of chapter 8 of the report and to refer it to the Select Committee on Standards and Privileges. I believe that this is the right course of action in the first instance and I support the motion. The Committee rightly observes:
	“The integrity and effectiveness of the Select Committee system relies on the truthfulness and completeness of the oral and written evidence submitted.”
	The Committee’s report contains four specific conclusions relating to possible contempt, which are set out in paragraph 275. The findings are, of course, disputed vigorously by the individuals and organisation concerned. Although it would be for the House itself to reach a final determination on whether a contempt has been committed and, if appropriate, to respond in the light of any recommendations by the Standards and Privileges Committee, it should do so on the basis of a full and impartial consideration of the facts and appropriate steps by that Committee.
	Should the Standards and Privileges Committee conclude that the Culture, Media and Sport Committee was knowingly misled, it would be right for the Standards and Privileges Committee to consider any appropriate action, having regard to the House’s 1978 resolution to use its penal jurisdiction in respect of non-Members as sparingly as possible and only when the House is satisfied that it is essential to act in order to provide reasonable protection from improper obstruction causing or likely to cause substantial interference with its functions. The Committee on Standards and Privileges, which is chaired with such distinction by the right hon. Member for Rother Valley (Mr Barron) and whose members are accustomed to the impartial consideration of complex and contested issues, is well equipped for this role. The House should concern itself today, therefore, with the specific question whether to refer to the Standards and Privileges Committee the issues identified in chapter 8 of the report. I believe it should, and I support the motion.

Angela Eagle: I echo the comments of the Leader of the House by paying tribute to the Culture, Media and Sport Committee for its significant work on the ongoing, complex and important matter of News International and phone hacking. Throughout its long inquiry, the Committee has been chaired admirably
	by the hon. Member for Maldon (Mr Whittingdale), and his Committee has pursued its inquiries in a commendable and dogged fashion. Just as the Treasury Select Committee pursued its inquiries into the banking crisis, so the Culture, Media and Sport Committee has pursued its investigations into the media crisis. I know the work has been exhaustive and exhausting for the members of the Committee, past and present, and the House staff supporting them, and once more I pay tribute to all involved.
	Members will be well aware of the context of this report, which the hon. Member for Maldon has just set out. The Committee’s inquiry began in the last Parliament and has taken place against a background of rapid external developments. Despite the challenges, it is a tribute to the Committee that it has produced its report in spite of the ongoing police investigation and the Leveson inquiry. Lord Justice Leveson’s inquiry, which we expect to report in the autumn, will be of great importance. We are inevitably constrained in what we can say today, given the context, but the House will have further opportunities to debate the wider issues. The motion before us is therefore a narrow one, as the Leader of the House has just told us.
	From their introduction in 1979, Select Committees have had the power to send for persons, papers and records. They have relied largely on written and oral evidence to perform their duties. Over more than two decades, and during hundreds and hundreds of separate inquiries, Select Committees have ably and satisfactorily used mainly informal powers to ensure that they can access the evidence they need. However, we should not forget the purpose of such inquiries: Select Committees exist not just to hold the Government to account and to examine in detail the implication of Government bodies and policies, but to shine a light across the public realm. The powers of the House are for a purpose: to enable Parliament, on behalf of our constituents, to hold the powerful to account. Today the Select Committee system works well, but it would not if witnesses felt they could mislead a Committee without consequence.
	Although Committees rarely take evidence on oath, the House of Commons 2011 guidance for witnesses giving evidence to Select Committees is clear. It states that witnesses are expected to answer fully, honestly and truthfully, and:
	“Deliberately attempting to mislead a committee is a contempt of the House”.
	The Culture, Media and Sport Committee concludes, at paragraphs 274 to 280, that three individuals—Les Hinton, Tom Crone and Colin Myler—and, corporately, News International and the News of the World misled Parliament in their evidence to the Committee. Under these circumstances, it is right that the matter be referred to the Standards and Privileges Committee for further investigation and consideration. We should not seek to pre-judge or second-guess the work that the Standards and Privileges Committee may undertake, under the able chairmanship of my right hon. Friend the Member for Rother Valley (Mr Barron). It is enough that we agree today to refer this important matter to that Committee, which is why the Opposition support the motion.

Therese Coffey: It is a privilege to speak in today’s debate, and I wholly endorse the motion before the House today. It is fair to say that
	the Culture, Media and Sport Committee was absolutely united in saying that Les Hinton, Tom Crone and Colin Myler had misled Parliament. That was evidenced by just one aspect of an external lawyer’s perspective. Julian Pike from Farrer & Co. affirmed that Parliament had been lied to when responding to a question from the hon. Member for Newcastle-under-Lyme (Paul Farrelly). When asked by the hon. Gentleman, “When did you first know about the evidence given to this House?”, he answered, “At the moment they said it, back in 2009.” Such affirmations from external parties give confidence to members of the Committee on the conclusions reached in our report.
	In preparing our report, we were advised not to take on the principle of lawyers, in serving their clients, not having regard to allowing falsehoods to be perpetuated, but instead to accept that lawyers are there to serve their clients. However, we all have to show personal leadership. I wonder at times whether lawyers should take a look in the mirror—individually and, as the legal profession, collectively—and decide to take a certain view on these ethical matters, including whether they wish that position to continue to be part of their ethical code.
	I think it is fair to say that the Committee was not entirely united on chapter 8, owing to the fourth point in paragraph 275. However, we all accept the established principle of vicarious liability, and that the company should accept responsibility for what happened in that terrible time.
	As I have stated before, News International will have a long time to regret not taking action after our excellent predecessor Committee’s 2009 report—as it now appears to be doing through its internal management and standards committee. I point to paragraph 278. Parliament—our Select Committee—was careful to try not to trample on criminal proceedings, for which we could not have been forgiven. However, we should reflect on the fact that it is thanks to parliamentary privilege that we were able to uncover and bring certain information through to Parliament that the Leveson inquiry would not have been able to bring. It is not acceptable to evade the truth when speaking to parliamentarians. It is not acceptable simply to try to leave people second-guessing, so that they may be misled—often deliberately so. It is imperative that people are prepared to tell the truth, the whole truth and nothing but the truth, and we demand nothing less for our constituents.

Robert Buckland: I am grateful for all the work that has been done by the Committee, so ably chaired by my hon. Friend the Member for Maldon (Mr Whittingdale). Does my hon. Friend the Member for Suffolk Coastal (Dr Coffey) agree that the issue about taking an oath is irrelevant, as when a witness comes before a Select Committee there is an expectation that they must tell the truth, whether or not they swear an oath?

Therese Coffey: That is absolutely right. As the shadow Leader of the House said, that was in the guidance. I agree with my hon. Friend that it is irrelevant whether or not somebody puts a Bible or some other thing in front of them; they are in this House because they have been asked, on behalf of the people of this country, to come to answer questions. People should do that honestly, straightforwardly and without reservation.

Kevin Brennan: The taking of the oath is not irrelevant, because if someone gives evidence under oath that turns out to be untrue—these powers of a parliamentary Select Committee exist for a reason—they can subsequently be charged with a criminal offence under the Perjury Act 1911.

Therese Coffey: The hon. Gentleman is perhaps more experienced in parliamentary practice than I am, but I am not of the opinion—this has not been presented to our Committee, as far as I am aware—that that would have made any difference in terms of criminal proceedings.

John Hemming: Does the hon. Lady accept that such comments given to Committees are subject to article 9 of the Bill of Rights and therefore cannot be questioned by the courts, and so that situation probably does not apply?

Therese Coffey: I am not a lawyer; I stand here as a parliamentarian who passes law. In response to the points raised by my hon. Friend the Member for Birmingham, Yardley (John Hemming) and the hon. Member for Cardiff West (Kevin Brennan), my understanding is that any information given as evidence during parliamentary sittings cannot necessarily be used in a court of law. That is part of the basis of parliamentary privilege.

Kevin Brennan: rose —

Therese Coffey: I do not wish to give way further, because I know that other hon. Members want to speak on this topic, as the hon. Gentleman may want to do.
	We are the Parliament of the people and we should not be lied to—end of story.

Chris Bryant: I, too, pay warm tribute to the Chairman of the Committee, the hon. Member for Maldon (Mr Whittingdale), because this task has been particularly difficult, not least because it has followed on from previous inquiries, not only while he has been Chairman, but carried out when my right hon. Friend the Member for Manchester, Gorton (Sir Gerald Kaufman) chaired the Committee.
	This is a debate about privilege, and I always think that the word “privilege” is an unfortunate one to use in relation to Parliament, as I am sure would most voters. The truth is that we have not yet seen all the evidence. It is important to note that, precisely for the reasons that the hon. Gentleman has adduced that nobody has wanted to trample on the toes of a criminal investigation, we are so far—this is true of Leveson as well—seeing only the tip of a very large iceberg. The issues that have been presented to us in the report refer to just three people, but more than 40 have been arrested and there may be further arrests yet.
	When the whole story has come out, as I hope it will eventually, I think this instance will prove to have been one of the most flagrant examples of contempt of Parliament in Parliament’s history. It was not just one person at one time or one organisation for a brief period of time; a series of people systematically and repeatedly lied so as to protect themselves, to protect their commercial interests and to try to make sure that they did not end up going to prison. They did that
	knowing fully that they were telling lies to Parliament, and I believe that that is a fundamental contempt. If we look through the history of Parliament, it is difficult to find a moment when there was such a concatenation of deliberate abuses—contempt of Parliament. That is why we need to take this moment very seriously.
	There was covert surveillance of Members of Parliament, deliberately to intimidate them in going about their duties. That applied particularly to members of the Committee. As we know, the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) had his phone hacked, as quite possibly did some four score others. Indeed, News International managed to turn the Metropolitan police into a partially owned subsidiary, whereby members of staff from one organisation were going to work for another and then coming back. [Interruption.] I note that some of my hon. Friends suggest that the subsidiary was not partially owned.
	The important thing for us to decide is what we do about this. I think that everybody is agreed that something egregious and terrible has happened. The question is what we do now. The Government have published a White Paper on parliamentary privilege, and it seemed to me that the Leader of the House was trying to suggest to the Committee on Standards and Privileges that it should be very wary of using penal powers or recommending that penal powers should be used. The Scottish Parliament, however, has precise powers under section 25—I think—of the Scotland Act 1998: where people refuse to give evidence to a Committee of the Parliament or to the Parliament or where they lie to Parliament, they are liable to imprisonment for up to three months. That provision is not written into statute for us, but we should certainly consider it.
	Perjury before a court attracts a maximum sentence of up to seven years’ imprisonment, and even perjury by making a false declaration in a statutory declaration is liable to a sentence of up to two years’ imprisonment. The factors considered when sentencing would be whether the lie was said just once, whether it was inadvertent or deliberate, the impact that the lie caused, whether there was more than one lie, and on how many occasions the lie was perpetuated.

Kevin Brennan: Further to my earlier intervention, does my hon. Friend remember the point of order I raised on this matter on 14 July 2011, when Mr Deputy Speaker confirmed that under the Parliamentary Witnesses Oaths Act 1871 and the Perjury Act 1911, Select Committees can require witnesses to give evidence under oath and make them subject to criminal charges of perjury if they are subsequently proved to have lied?

Chris Bryant: I do remember that point of order, which is why when my hon. Friend intervened on the hon. Member for Suffolk Coastal (Dr Coffey), I knew what he was going to ask her. It is a point that he rightly makes and has made repeatedly.
	We are congratulating ourselves today on the Select Committee process bringing us to this point, but if the Select Committee process had worked better, we might have reached this point three years ago. The Select Committee might have been able to require Rebekah Brooks to give evidence in 2009 and it might have been taking evidence under oath from the very beginning. Then we would not have to decide what we should do
	about these people, as the courts would be doing so. If we were to apply all those elements of how to decide a sentence for perjury before a court to this case, I would have thought one of the lengthier sentences would be handed down. The same is true for contempt of court, which carries a sentence of up to two years’ imprisonment.

Therese Coffey: I hear what the hon. Gentleman says, but does he accept that Select Committees do have the power of summons, which was in fact used during part of the current inquiry?

Chris Bryant: Yes, but Committees have quite often been rather tentative about using those powers. I remember discussing this with the hon. Lady in the Library, and she was uncertain whether that power existed—and I kept on telling her, “Yes, it does exist. It can be used. All we have to do is make sure that the Clerk of the House uses the proper processes.” It is important to remember that we have these powers and that they need to be used more effectively. For instance, it seems extraordinary that no member of the Murdoch family had ever given evidence to the Culture, Media and Sport Committee until the day on which Mr Rupert Murdoch and Mr James Murdoch were summoned last summer. I am sure that that was not because Committees did not want to interview the most important significant player in the British media landscape in this country.
	As well as using such powers more effectively, we need to decide for ourselves that we have these powers. I know that there are those who say that we are not a High Court of Parliament anymore; that we are not a court. They say that we are not able to provide a fair tribunal, as the Human Rights Act or, for that matter, the European convention on human rights, might determine. So would it be possible for the House of Commons to make a determination in relation to any individual, for instance requiring that individual to be arrested and brought to the House? Some people think that the very idea of bringing someone to the Bar of the House is anachronistic.
	We must have some powers to be able to do our job properly. We must be able to summon witnesses, and if they do not want to come here—as happened with the Maxwell brothers, and seemed at one point to be going to happen with the Murdochs—we must be able to send the Serjeant at Arms to summon and, if necessary, arrest them and bring them to Parliament. We need to be able to arrest. Most Members will not have been here on the occasion when the Chamber was invaded, but the Serjeant at Arms has to be able to arrest. It is quite a simple power.

John Whittingdale: rose—

Robert Buckland: rose—

Chris Bryant: I have a multiplicity of offers.

Mr Speaker: Order. Before the hon. Gentleman takes an intervention from the hon. Member for South Swindon (Mr Buckland), may I gently remind him that the narrow matter under consideration today is the question of whether to refer it to the Standards and Privileges Committee—to which subject I know that he is addressing himself?

Chris Bryant: Indeed, Mr Speaker. It has been customary in all the debates that have taken place historically on such motions to try to provide a little bit of advice for the Select Committee that will be dealing with the matter, so that it knows how to deal with it.
	I shall give way first to the hon. Member for Maldon (Mr Whittingdale), and then to the hon. Member for South Swindon (Mr Buckland).

John Whittingdale: I shall bear your warnings in mind, Mr Speaker, but the hon. Gentleman is raising matters that I think Parliament needs to consider. In particular, the Select Committee did decide to dispatch the Serjeant at Arms to serve a summons on Mr James Murdoch and Mr Rupert Murdoch after they had initially said that they were not willing to attend the Committee at the time when we had asked them to attend. I have to say, however, that we did so with some trepidation, because we genuinely had no idea what would happen if they maintained their refusal to come. That too is something that Parliament needs to think about.

Chris Bryant: I absolutely agree, but I also think that we should no longer live in an era of trepidation in this House. I think that we should step more boldly.

Robert Buckland: I entirely agree with the hon. Gentleman about being bold in regard to contempt of Parliament and how the House enforces its rules, but does he not share my sense of trepidation about involving the prosecuting authorities in dealing with any alleged lies that have been told to us? Does that not present a danger that the courts will be brought in to determine issues that are properly the province of this House and no other?

Chris Bryant: The hon. Gentleman has taken me into much wider subject matter, but he too is trepidating—if that is the verb from “trepidation”—and I do not want to trepidate. I want to step boldly.
	I believe that the House, and the Select Committee itself, should consider, in terms, first whether or not the three individuals mentioned, and perhaps, corporately, News International, should be summoned to the Bar of the House. I believe that that must still be an important power available to the House. Secondly, I think that the House and the Committee should consider whether or not the individuals should be fined, not least because considerable expense has been incurred by Parliament and by the prosecuting authorities through the process of lying to Parliament. Thirdly, I think that it must be right for us to consider whether or not to imprison. If this had happened in the Scottish Parliament, it would have led to imprisonment. If it had been a contempt of court, it would have led to imprisonment. If it had been perjury in court, it would have led to imprisonment.
	It has been said that some of these people are not in this country. What can we possibly do about it? The last person who was arrested and imprisoned by Parliament, in 1880, Charles Grissell, also fled the country. He went off to France, to Boulogne. The Speaker sent the Serjeant at Arms’s messenger to Boulogne, and when Charles Grissell came back to the country he was arrested and sent off to Newgate until the end of the parliamentary Session.
	I simply think that we were hoodwinked. Indeed, for a long period politicians were so nervous and frightened of what the press would say about us that we effectively put the hoodwinks on ourselves. Now the temptation will be for the Committee to shy away from using any of its penal powers, and I think it a shame that that seemed to be the direction in which the Leader of the House was pushing it. I think that would be a profound mistake, because, surely to God, it is time we asserted the freedom of Parliament—in fact, the rights of Parliament. We must do so not for our own sakes—it is irrelevant for our own sakes—but simply because if Parliament is lied to, we cannot do our job on behalf of our constituents, and if Parliament is lied to and there is impunity thereafter, people will lie again, and then the democratic process unfolds.

Damian Collins: It is a pleasure to follow the hon. Member for Rhondda (Chris Bryant), and I join him and other Members in paying tribute to my hon. Friend the Member for Maldon (Mr Whittingdale) for the great care and skill with which he chaired what was a lengthy and challenging inquiry.
	I want to address the key point that the hon. Member for Rhondda brought to our attention: there must not be no sanction for lying to a parliamentary Committee. However, although we may like reassuring ourselves about the traditions of this House and its rights, it is not clear what the sanctions should be. It is unclear whether someone giving evidence not under oath to a Select Committee has the same obligations as if they were under oath. The Committee obviously considered that before the Murdochs gave evidence to us last July. I believe it is very important that there are consistent procedures. There should not be some witnesses who are made to swear on the Bible and some witnesses who are not.

Alan Beith: Are we not in danger of getting into a situation where all witnesses before Committees have to appear under oath? The vast majority of witnesses who appear before Select Committees do so willingly in order to give of their information and expertise, and these issues therefore do not arise.

Damian Collins: I agree, but it should be implicit that someone giving evidence to a parliamentary Committee is telling the truth. I therefore do not think there should be a separate group of people who are made to take an oath. It should be implicit in the act of their giving evidence that they are telling the truth and openly answering the questions asked by Members of Parliament. It must be built into the processes of our methods of inquiry, particularly in Select Committees, that witnesses will tell the truth and there is some form of sanction against them if it can be demonstrated that they have not done so.
	At present, however, that is not clear. It is not clear what powers the Standards and Privileges Committee has to punish or recommend punishment. There may even be a question as to whether the recommendation of a penal sentence, as the hon. Member for Rhondda suggested, would itself be open to some form of legal
	challenge in the courts, including the European Court, which may seek to overrule the House on any such decision. We therefore need much clearer guidance about the available punishments and the processes for summoning witnesses to appear before a Committee.
	The Select Committee is posing an interesting challenge to the Standards and Privileges Committee, because in our conclusions in chapter 8 of the report we make recommendations about three named individuals—Colin Myler, Tom Crone and Les Hinton—in respect of instances where we believe they gave misleading evidence to the Committee. Members can read the report, the evidence given in previous sessions and the written evidence presented to the Committee, and thereby see that there are discrepancies in testimony and, I feel, clear evidence that we were given misleading testimony by those witnesses.
	There is a second issue that the Standards and Privileges Committee must consider: the corporate guilt of News Corporation, as also expressed in the conclusions of the report, and what sanctions there should be against a company and its directors and representatives, as opposed to a named individual who has given misleading testimony to Parliament. This is an important issue, and my hon. Friend the Member for Maldon touched on it in his speech.
	We must consider what in the evidence that was given has undone the News Corporation executives. They were not undone by a witness changing their story or a new witness giving evidence that was different from evidence given to our predecessor Committee in the last Parliament. They have largely been undone by documents that have always existed and were in the possession of the company, and which subsequently came to light as a result of the inquiry—by information that was always there and was always accessible to those executives, and that we believe they could, and should, have had access to. Indeed, we know that some of them—including Tom Crone and Colin Myler, who played a pivotal role in these investigations—did have access. We know that they had access to the Queen’s Counsel opinion suggesting that phone hacking and the use of illegal methods to obtain information was widespread. We know that information was received by the legal department of the company. We know that Clive Goodman suggested in his letter to Les Hinton that phone hacking was widely discussed within the company, and that that was rejected. We know that that information was known, and these executives have been undone by information that was neither presented to Parliament nor freely given but released as a result of cross-examination of witnesses by the Committee or released by lawyers or other people who chose to make it available to us. It would have been much better if the company, when it gave evidence last July, had provided that information. If the Murdochs had sought it themselves, they might have given us clearer and better evidence last July and we would have been able to conclude our inquiry somewhat sooner.
	We were consistently given false reassurances about the rigour of internal investigation, the work that was done to uncover phone hacking and those who had knowledge of it. Indeed, we have received information from Surrey police that states categorically that the police discussed the hacking of Milly Dowler’s phone with executives at News of the World in 2002. That was not a minor discrepancy or new information that had recently come to light; the information was known by
	people within that company for a very long time. Parliament was misled over a long time by some of those people and I agree with the hon. Member for Rhondda that we will probably not get the full picture until the conclusion of the police investigation and any subsequent trials. I am sure that the Committee, next year or in future years, will wish to return to the matter and give the House a fuller picture of exactly what happened based on all the evidence that has come to light.

Paul Farrelly: I congratulate the Chair of the Select Committee, the hon. Member for Maldon (Mr Whittingdale), on his excellent introduction. I agree very strongly with the hon. Member for Suffolk Coastal (Dr Coffey), who has just left the Chamber. Not a single member of the legal profession—not a single legal adviser to News International—has resigned their services when they knew that evidence that was being given to the Committee was false and misleading, and that is an issue for the legal profession to consider.
	I will be brief, because I believe our report’s conclusions are clear and speak for themselves. Our Committee has pursued the issue of phone hacking and how it reflects on press standards for five long years and, sadly, because of the forthcoming criminal trials, this might not be the final word. As the House has already heard, so as not to prejudice any prosecutions, we have taken great care in what we have said.
	The report is not just about phone hacking per se; it is about the integrity of the Select Committee system in Parliament. Two years ago, in our report on “Press standards, privacy and libel”, on the evidence we found it “inconceivable” that News International’s “one rogue reporter” defence could possibly be true. Yet on the same evidence, the Press Complaints Commission cleared the News of the World of wider wrongdoing and shot the messenger—The Guardian—instead. The PCC is, of course, now on the scrap heap, a busted flush, waiting for Lord Leveson to pronounce and the Government—possibly—to act on the future shape of regulation.
	After revelation upon revelation from the civil cases, last summer the then chair of the PCC, Baroness Buscombe, put her hands up. At long last, she was scathing about News International’s conduct and its so-called co-operation with PCC inquiries.

Mr Speaker: Order. I remind the House that the motion for debate is the question of whether to refer the Select Committee’s conclusions to the Select Committee on Standards and Privileges. As has already been indicated, it is perfectly legitimate to record and, in a sense, almost to report to the House the basic findings of the Committee and to offer to the House, as the Chair of the Culture, Media and Sport Committee did, the background to and context for our debate. That seems eminently reasonable, but this is not an occasion to rehearse all the issues, the evidence and the chronology of events that have led to where we are today. Although I do not in any sense seek to prescribe what people should say, there could be advantage in recalling the pithy observations of the hon. Member for West Bromwich East (Mr Watson).

Paul Farrelly: Thank you, Mr Speaker, and the background has been rehearsed well enough by the Chair of the Select Committee. I will now move on to
	what the Committee did about the lies to us, which the Press Complaints Commission’s chairman admitted when she said that there was only so much that the commission could do when people were lying to it.

Mr Speaker: Order. I just want to be clear that the hon. Gentleman has understood what I have said and intends to be guided by it. I presume that he is adducing this material in support of the proposition that the report should be considered by the Standards and Privileges Committee.

Paul Farrelly: You are right, as always, Mr Speaker.
	On the conclusions of the report that we are asking the House to note, if “collective amnesia” was the one phrase from our 2010 report that echoed long afterwards, I hope that our “wilful blindness” conclusion will be one of those that resounds with the Select Committee on Standards and Privileges this time. That is the wilful turning of a blind eye to wrongdoing, not just phone hacking, over a period of time as long as any repercussions could be contained through the exercise, if need be, of raw press political power.
	We were invited to lay most, if not all, of the blame for the cover-up on just two executives through News International’s damage-limitation exercise—Tom Crone, the company’s long-time in-house lawyer, and Colin Myler, the new and final editor of the News of the World. In our report, after months of deliberation and very patient amendment, with very skilful chairing, we declined that very unappealing invitation. As we navigated the issue of possible prosecutions, we asked whether it could be right to find wanting just a few executives who had so far not been arrested. We wondered whether it would be right, based on the evidence, to limit a critical verdict in our report if not just to one rogue reporter or one rogue newspaper, to just one rogue subsidiary, News International. After careful deliberation, we decided that it would not be right.
	During that time, the group’s founder, Rupert Murdoch, and his son James were directors both of the parent company, News Corporation, and of News International. At the same time, News International misrepresented the investigations it had actually undertaken and attacked the Select Committee remorselessly, and its executives authorised surveillance on certain members of the Committee. So, we found that it was important that the report, based on the evidence, drew a strong corporate conclusion about a culture that was set right from the top. I conclude by drawing the House’s attention to the final sentence of paragraph 275 on page 84 of the report:
	“In failing to investigate properly, and by ignoring evidence of widespread wrongdoing, News International and its parent News Corporation exhibited wilful blindness, for which the companies’ directors—including Rupert Murdoch and James Murdoch—should ultimately be prepared to take responsibility”.
	I commend the motion to the House.

Louise Mensch: Following on from the excellent speech of the hon. Member for Newcastle-under-Lyme (Paul Farrelly), I am glad that the motion calls for us to “note” the report, because—it is worth
	beginning by saying this—three members of the Committee, of whom I was one, did not agree with the very last paragraph of the conclusions, particularly the wilful blindness allegations against James and Rupert Murdoch. Nevertheless, I support the motion as it is written, and I think it is important that we refer this matter to the Standards and Privileges Committee because that is the least worst choice before the House. Frankly, there is no ideal answer to the situation in which we find ourselves. Parliament is in a difficult position, but that does not mean that we should take no action.
	We are here debating this motion because it is not usual for a witness before a Select Committee deliberately to mislead and lie to the Houses of Parliament. I must take issue with the hon. Member for Cardiff West (Kevin Brennan), who has inferred again and again that our Committee ought to have put witnesses under oath, after which, had they lied to us, they could have been charged with the common criminal offence of perjury. The Committee considered this issue very carefully indeed, but decided that it would be better for our inquiry not to take evidence under oath because certain legal privileges would not then kick in, which would allow witnesses to deny us certain information when we requested it and would allow their lawyers not to co-operate with us. The Committee decided that taking evidence that was not under oath would give us greater flexibility in our inquiry. The point has already been made that one does not wish to get into a situation in which, in order to protect the integrity of Select Committee proceedings, we routinely put every witness under oath. Indeed, it is part of the dignity of Parliament that there should be a simple assumption that there is a requirement to tell the truth to Parliament.
	The hon. Member for Rhondda (Chris Bryant) adduced the example of the Scottish Parliament and the powers that exist within that Parliament to punish those who lie to it. There is another example currently taking place across the Atlantic, where the baseball player Roger Clemens is about to go on trial for contempt of Congress, for having misled Congress. It is alleged that Mr Clemens lied to the American equivalent of a Select Committee of Parliament in, I think, 2009, when under oath he denied taking steroids, the allegation being that he did indeed take steroids, that he misled Congress and that a contempt of Congress was committed.
	Perhaps when we consider this jurisdiction, that may be one way for us to square the circle. I completely agree with the thesis of my hon. Friend the Member for Folkestone and Hythe (Damian Collins) that it cannot simply be the case that somebody lies to Parliament, sends a stiff letter to the Select Committee saying, “I don’t agree with your conclusions”, and that is the end of the matter. That cannot be acceptable. Nevertheless, we can all immediately see the problems inherent in the suggestion from the hon. Member for Rhondda that we should seek to imprison somebody without their being able to testify in their defence and without the legal protections that the European Court of Human Rights might demand in a procedure that was to terminate in imprisonment.
	In America we see, perhaps, the way to square the circle. It is prosecutors who have brought the case for contempt of Congress. That will be tried within the courts system. We have determined that we have been lied to. A simple method, perhaps, would be that we
	could refer the matter to the Director of Public Prosecutions and a trial could proceed on the basis that defendants would have all the protections of the court.
	After the referral to the Standards and Privileges Committee, perhaps there should be a wider debate in the House about what punishments ought to exist for serious contempt of Parliament. In the American system, the case against Mr Clemens is not merely that he lied to Congress. There is also a materiality test, as the hon. Member for Rhondda noted. The lies told to the US Congress must materially have affected the investigation that was ongoing. In the case of the Select Committee, that test would manifestly have been passed, as lies of substance were repeatedly told us by lawyers who should know better. There is a test of proportionality built into the offence.

Jim Sheridan: The hon. Lady and others mentioned the situation in the Scottish Parliament. Depending how things evolve, the powers of the Scottish Parliament could be tested in the near future. I am concerned about the legal situation of witnesses who gave evidence via a video or conference link. Is that any different from witnesses who gave evidence face to face?

Louise Mensch: That is an interesting question. There ought to be no difference. People are testifying before the Parliament of the United Kingdom when they testify before a Select Committee, and Parliament has the right to expect that it is not materially lied to. In my opinion, the same sanctions should apply.
	The whole House is familiar with the offence of contempt of court that is routinely used. Let us hope that it would not be so routinely used, but I believe an offence of contempt of Parliament ought to be created. It would be used only in the most exceptional circumstances and as with any other offence, it should be up to prosecutors to try it, and the protections of the court system and the defence system should kick in.
	As the old joke says, I wouldn’t have started from here, yet that is where we are. We must rely on the Standards and Privileges Committee because there is nothing else for the House to do in the present circumstances. Perhaps we need to look at the wider powers of Parliament, the importance of Select Committee hearings, procedures for creating offences, and the material problem that Parliament has a right to be told the truth in serious inquiries, whether or not a witness is under oath. That is something that the House ought to consider in future deliberations. For now, I am delighted to commend to the House the motion to note and not to endorse the report.

Kevin Barron: If the House decides to refer this matter to the Committee on Standards and Privileges, we will ensure that all our processes are rigorously fair and impartial. It is likely that there will be widespread speculation before we are in a position to say more about the Committee’s plans, but we will not be rushing into making any hasty decisions and will consider our actions carefully, thoughtfully, and with professional advice from the appropriate sources.
	At its meeting this morning, the Committee agreed that none of its members would discuss this matter outside the Committee, whether with colleagues or other
	third parties. I trust that Members and others will respect the Committee’s decision, and will not try to engage Committee members in discussions about this inquiry.

Philip Davies: I rise briefly to commend once again my hon. Friend the Member for Maldon (Mr Whittingdale) for the way in which he chaired what has been, at times, a challenging and difficult Committee, not just in this Parliament, but in the previous Parliament, when our conclusions were not always unanimous and we had a number of disagreements along the way. He, as ever, chaired the Committee expertly.
	I would also like to take the opportunity to commend the other members of the Committee. We did not always agree on these matters, but everybody put a lot of hard work into the report. There was a lot of dedication over a long period, and even though we may well have had an honest disagreement at the end of it on some matters, people should not underestimate the efforts that Committee members on both sides of House put in to get to where we are today, not least the hon. Members for West Bromwich East (Mr Watson) and for Newcastle-under-Lyme (Paul Farrelly), who put in a lot of time and effort to uncover the wrongdoing that clearly took place at News International.
	I absolutely endorse the case that was put by my hon. Friend the Member for Maldon at the beginning of the debate on why the matter should be passed on to the Standards and Privileges Committee. I want to emphasise that the Committee did not come lightly to the decision that Tom Crone, Colin Myler and Les Hinton had lied to the Committee in its previous inquiry, and, it might be said, in this one too. I do not think that any Select Committee would lightly decide overtly to state that certain named individuals lied to it in the course of its inquiry. I want to press that point to the Chairman of the Standards and Privileges Committee so that he appreciates that the decision was not entered into lightly. Those conclusions did not come flippantly, but after much serious consideration and deliberation.
	I also want to emphasise how our inquiry was repeatedly impeded by News International, not just this inquiry, which, to be perfectly honest, showed for the first time elements of News Corporation co-operating with the Select Committee, but particularly the previous inquiry, when News International repeatedly, consistently and corporately made it clear that it was impeding our inquiry. In case people are not aware, I have to report that News International attempted to have the hon. Member for West Bromwich East and me thrown off the Committee during the last Parliament because it thought that we would not be particularly favourable to them in our deliberations. As the hon. Member for Wallasey (Ms Eagle) made clear, it would be absolutely unacceptable if people could come to Parliament and know that they could get away with repeatedly lying to the Committee. If that did happen, it would open the floodgates for witnesses not to tell the Committees about anything that might be inconvenient to them.
	Let me make one brief point to emphasise how we did not enter into these matters lightly. The lies were not just little white lies, but deliberate attempts to mislead the Committee on serious matters. For example, my
	hon. Friends the Members for Maldon and for Folkestone and Hythe (Damian Collins) mentioned the letter that Clive Goodman sent to appeal against his dismissal to Les Hinton, saying that this practice was widespread in
	News of the World
	and that it was discussed on a daily basis. Yet Les Hinton made it clear that he had seen no evidence at all to suggest that the practice was more widespread, which was quite a palpable lie.
	We must also remember that on the back of the letter that Les Hinton received, he was responsible for making sure that, one way or another, Clive Goodman received a payment totalling around £250,000. That happened only for him to say quite flippantly that there was no evidence at all; there was certainly sufficient evidence for him to authorise £250,000 to be paid out from News International to Clive Goodman—somebody who was convicted of a criminal offence, caused huge embarrassment to the company and could have been dismissed for gross misconduct. I would like to press upon the House, and the Standards and Privileges Committee, the fact that that was not only repeated, but very serious and blatant.
	Finally, I would like the Standards and Privileges Committee to consider the motives of the people who lied to us—my hon. Friend the Member for Corby (Louise Mensch) touched on this in her contribution—because it is not entirely clear why certain people lied. Was it to protect themselves, which might have been the case for some people, to protect colleagues, or was it to protect the company and its reputation as a whole? The Committee might like to consider what motivated those people to lie and whether different motivations should come with different punishments. I am not offering any particular opinion, but I think that that is something that should be put on the record.
	The reason I mention motives is that it was perfectly apparent during the previous inquiry in the last Parliament that witnesses from News International came to the Committee with a corporate game plan: nobody knew anything, nobody could remember anything, and nobody knew anybody who might know anything, and that was everybody’s defence at every possible turn. Whatever question was asked, that was the corporate defence from everybody who appeared before us under the News International banner, and it was particularly striking. I recall asking Les Hinton during that inquiry whether he had received any coaching before the evidence session so that we would know where we stood and whether News International had employed someone to advise them on how to answer the questions.
	That is something the Standards and Privileges Committee might want to look at, because to my mind, and that of the Committee as a whole, the three individuals we named palpably lied to us, and it is very interesting to consider how on earth that came about. Were they told to give those answers, or did they make that decision themselves? I certainly have a feeling that on some occasions they were told what to say and that it was a corporate decision, rather than one they made themselves.

Alun Cairns: I pay tribute to my hon. Friend, the Committee and its Chair for the way they have conducted their inquiry and today’s debate. Will he reassure me that, as this ever-changing situation evolves, if any other witnesses are found to
	have misled or lied to the Committee, it will take the same action and call for them to be referred to the Standards and Privileges Committee?

Philip Davies: I am grateful to my hon. Friend but fear that his question is slightly above my pay grade, as those are not decisions I can take for the Committee as a whole. I am sure that my hon. Friend the Member for Maldon, the Chair of the Committee, listened carefully to his intervention. He is probably the best person to direct that request to. I would certainly be sympathetic to the idea of the Committee looking again at certain individuals, if the legal situation allowed, who might also have lied to us, if that is what we conclude.
	In conclusion, these are very serious matters, matters about which the Committee was absolutely unanimous, with regard to the three individuals concerned, and that we did not enter into lightly. We might have had some very well-publicised disagreements about parts of our report, but on this we were absolutely united. On the report as a whole, and on the inquiries as a whole, there was far more that united the Committee than divided it.

Kevin Brennan: I, too, will attempt to be brief. Far from being critical of the Culture, Media and Sport Committee, I praise it for the work that it has undertaken on this matter over many years, dating back, as my hon. Friend the Member for West Bromwich East (Mr Watson) said at the beginning of his remarks, to the question that my hon. Friend the Member for Rhondda (Chris Bryant) asked way back in 2003 of the then Rebekah Wade about the payment of police officers, a practice that he and I were strongly convinced—shall I put it that way?—was not uncommon but was taking place at the time.
	May I pick up on the matter, and slightly disagree with my hon. Friend the Member for Rhondda, regarding the Committee on Standards and Privileges? I support the motion before us, but it is unfortunate that we have to talk about referring the issue to the Committee on Standards and Privileges and about the possibility of Parliament imprisoning individuals because they have lied to a Select Committee. That is the essence of the point that I have made for some time, and to which the hon. Member for Corby (Louise Mensch) referred, about the need for evidence to be taken under oath by Select Committees.
	The hon. Lady started by saying that taking evidence under oath would be a bad idea because, in effect, lawyers would make witnesses clam up, and she is absolutely right that, at the moment, a Select Committee chooses whether to do so, but, as in the case that she cited from the United States, it is common practice for committees of Congress to take evidence under oath, and that is exactly why Roger Clemens can be held accountable on a charge of contempt of Congress.
	I do not mind whether the criminal charge that results from such practice is contempt of Parliament, because there is no question but that News Corporation and News International, in their attitude to our Select Committees, showed over many years utter contempt for the proceedings of Parliament. They did so because they thought that those Committees had no power, no authority and no teeth—exactly because they were not taking evidence under oath.

Louise Mensch: The situation is not quite as simple as a simple perjury charge, which would apply on any occasion that one gave evidence under oath. The case in the United States refers specifically to contempt of Congress, which in respect of Parliament is the offence that we should create. As a corollary, does the hon. Gentleman not agree that there must be grave disquiet when a non-judicial body, such as Parliament, agrees to imprison a person? Does he agree also that the offence should be prosecuted by a prosecutor and decided by the courts in the normal way—after it has been committed against Parliament?

Kevin Brennan: I am not quite sure how the hon. Lady disagrees with me, to be perfectly honest. As I pointed out earlier, there is an Act of Parliament in place, the Parliamentary Witnesses Oaths Act 1871, which means that oaths can be taken before Select Committees, and any false evidence given under those oaths would be subject to prosecution under the Perjury Act 1911. If she would prefer to substitute a criminal offence of contempt of Parliament for that, I would be perfectly happy, but my point is that I feel uneasy that the only option available to us, because in the case before us an oath was not taken, is referral to the Committee on Standards and Privileges and the possibility of Parliament having to consider using that rarely used power of imprisonment.

Bernard Jenkin: Will the hon. Gentleman allow me?

Kevin Brennan: I will, because the hon. Gentleman is the Chairman of the Public Administration Committee, but I will not take any further interventions.

Bernard Jenkin: I am very grateful to the hon. Gentleman. I regret the fact that I have been in the Chamber for only part of the debate, but I heard the opening remarks. I feel it is appropriate for me to inform the House that the Liaison Committee has charged me with working with colleagues to investigate the whole question—it is very germane to this debate—of how Select Committee powers should be exercised.
	Listening to these exchanges, I hear many matters that we have discussed and considered carefully, and I hope that the Chairman of the Standards and Privileges Committee will have regard to the findings that I hope we will produce in short order, which should provide not only some guidance on how the Committee should conduct its investigation into the matter, but some guidance to the House on what the consequences of contempt should be and, in future, on whether we will need to avail ourselves of the courts or of our own procedures. I am very grateful to my right hon. Friend the Leader of the House for emphasising that we are a House with a penal jurisdiction. That was a very important thing to put on the record.

Kevin Brennan: I am grateful to the Chairman of the Public Administration Committee for that intervention. He knows that I was a member of the Committee for many years, briefly under his chairmanship and in previous years under the chairmanship of Tony Wright, when we also considered a number of these issues.
	I have appeared, as the hon. Gentleman may and others will, both as a member of a Committee and as a witness, giving evidence to a Committee, and I have never understood why an oath, although it is implicit for a Member of Parliament, is not administered while giving evidence to a parliamentary Committee. I shall say nothing further, other than that I support the motion before the House.

John Hemming: We are elected here to represent our constituents, and the privileges of Parliament are their privileges. One of those privileges is their right to talk to us even if people bully them; the other is to get answers. If we do not act when people lie to Parliament, we are failing our constituents.
	I agree with pretty well everything that the hon. Member for Rhondda (Chris Bryant) said. We need to take a particularly robust approach to this. Contempt of Parliament is a very detailed matter; a barrister, Kieron Wood, wrote a book about it recently. I gave a copy to the Library, so any hon. Member can take it out and read the details of what has happened in the past. It is important that we operate robustly to protect the rights of our constituents to have us act on their behalf to find out what is going on.
	As the hon. Member for Rhondda said, if we had been more robust at an earlier stage, perhaps all this would have happened at an earlier stage. We need a separate jurisdiction. There are questions about how the police have behaved in respect of this situation, so simply passing the matter over to them is an inadequate response. If, as some people have suggested, there has been an issue with the activities of the Crown Prosecution Service, then we need a separate jurisdiction for that. I have concerns about people being banned from court proceedings, even criminal court proceedings, as has happened recently. At the end of court proceedings, Parliament must have the chance to find answers and to explain to citizens what is going on. In the interests of our constituents, and so that we can stand up and protect democracy, we must take robust action.

Simon Hughes: I, too, will be brief in speaking in support of the motion. I repeat my tribute to the members of the Select Committee, all of whom have worked very effectively for us, including my hon. Friend the Member for Torbay (Mr Sanders), who made sure that all three parties were well represented.
	The other day, we had a memorial service for Lord St John of Fawsley, who set up the Select Committee system back in the 1980s. This case has taken us to a crucial point in the development of Select Committees. We listened carefully to the right hon. Member for Rother Valley (Mr Barron), who said things that have been gratefully received about how his Committee proposes to do its business, and we have no doubt that it will do it appropriately.
	Bluntly, though, it is no good having a Select Committee system that is the only way in which Parliament can interrogate people, quiz people and ask people questions on our collective behalf unless sanctions can be enforced when they do not follow the rules. The whole exercise
	has led us to this point. The Leader of the House made it clear, and Parliament is now clear, that we need to address the difficult questions of how we deal with breaches of the understandings or commitments that people undertake. Is it by our taking a criminal sanction? Is it, as the hon. Member for Corby (Louise Mensch) suggested, by our referring the matter to others to prosecute in the criminal courts? We cannot duck the question, and it needs to be picked up.
	Colleagues know of my interest. I was the only Member of Parliament originally to give evidence in the trial that convicted Mr Goodman and Mr Mulcaire. Throughout the last part of the previous Parliament, I argued that we needed a public inquiry and needed to increase the criminal sanctions on those in the world of the press, not only those at the News of the World,who broke the law. Very recently—I wanted to leave it until late in the day—I took civil proceedings against the News of the World.
	For me, there are two remaining substantive points. First, the serious issue is not so much that these individuals flaunted their positions, refused to co-operate with the Select Committee, and are found to have given dubious evidence, but that people from a very large national and international company did so. In Thomas Fuller’s famous phrase of 1733, which is oft used by lawyers,
	“Be you never so high, the law is above you.”
	We need to make sure that the law is above the News Corporations of this world and that Parliament is above the News Corporations of this world. The fact that someone is from a big company or an international company should not preclude them from telling the truth and from being answerable and accountable. We have remitted to the regulatory body, Ofcom, the duty of deciding who is a fit and proper person to hold a licence, and it is doing that. These are relevant matters, and corporate responsibility has to be accepted.
	Finally, I am not at all vindictive about these things, but I am clear that we now have to bring the matter to a conclusion. The police are doing their job and Lord Justice Leveson is doing the job that we have asked him to do very well. Parliament has to complete its job, too. I trust that the motion represents the right way to do it and that the Standards and Privileges Committee will start its work unencumbered by pressure. We have to find ways of holding people to account when they abuse this place and ensuring that they understand that this is the Parliament of the people, and that they will be answerable and tell the truth.

Adrian Sanders: I, too, congratulate the hon. Member for Maldon (Mr Whittingdale) on his chairmanship of the Culture, Media and Sport Committee during not just this inquiry but previous ones, including those for which I was a member of the Committee.
	I also thank members of the Committee past and present, and I thank the members of staff who have supported it for their patience and counsel. It has not necessarily been easy for them.
	I will be brief, because much that needed to be said has already been said. I hope that the Standards and Privileges Committee will take into consideration one of the difficulties that the Culture, Media and Sport Committee had, which was that the circumstances were changing week by week as new evidence became available. That may also become a challenge for the Committee chaired by the right hon. Member for Rother Valley (Mr Barron). Ongoing inquiries and investigations may influence its decision making.
	The most important issue, as has been mentioned, is the ability of Select Committees to seek out facts and uncover the truth. If there is no penalty for misleading a Committee, it affects our entire Select Committee system. I suspect that that concern lay behind the unanimity of the Culture, Media and Sport Committee on the relevant part of the report. Our experience has highlighted the need for Parliament to consider its powers and the procedures that we follow.
	I end with a note of concern, although I fully support the motion. It is that the Standards and Privileges Committee meets in secret, which could be a difficulty. Those who, in our view, have misled the Culture, Media and Sport Committee could seek to challenge anything that the Standards and Privileges Committee does if it meets in secret.
	Question put and agreed  to .
	Resolved ,
	That this House notes the conclusions set out in chapter 8 of the Eleventh Report from the Culture, Media and Sport Committee, Session 2010-12, on News International and Phone-hacking, HC 903-I and orders that the matter be referred to the Committee on Standards and Privileges.

Business without Debate

EUROPEAN UNION DOCUMENTS

Motion made, and Question put forthwith (Standing Order No. 119(11)),

Posting of Workers and the Right To Take Collective Action

That this House considers that the draft Council Regulation on the exercise of the right to take collective action within the context of the freedom of establishment and the freedom to provide services (European Union Document No. 8042/12 and Addenda 1 to 3) does not comply with the principle of subsidiarity for the reasons set out in Chapter 1 of the First Report of the European Scrutiny Committee (HC 86-i); and, in accordance with Article 6 of Protocol (No. 2) of the Treaty on the Functioning of the European Union on the application of the principles of subsidiarity and proportionality, instructs the Clerk of the House to forward this reasoned opinion to the Presidents of the European Institutions.—(Angela Watkinson.)
	Question agreed to.

Financial Services Bill
	 — 
	[2nd Allocated Day]

[Relevant documents: the Twenty-first Report from the Treasury Committee, Session 2010-12, Accountability of the Bank of England, HC 874, and the Government response, contained in A new approach to financial regulation: securing stability, protecting consumers, Cm 8268; the Twenty-sixth Report from the Treasury Committee, Session 2010-12, Financial Conduct Authority, HC 1574; the Twenty-seventh Report from the Treasury Committee, Session 2010-12, Accountability of the Bank of England: Response from the Court of the Bank to the Twenty-first Report from the Committee, HC 1769; and the Twenty-eighth Report from the Treasury Committee, Session 2010-12, HC 1857, Financial Conduct Authority: Report on the Government Response.]
	Further consideration of Bill, as amended in the Public Bill Committee

Clause 7
	 — 
	Orders under section 22 of FSMA 2000

Amendment made: 4,page39,line36, after ‘25(1)’ insert—
	‘(a) after “22(1)” insert “ or (1A)”, and’.—(Mr Hoban.)

Clause 9
	 — 
	Permission to carry on regulated activities

Christopher Leslie: I beg to move amendment 75,page43,line16, at end insert—
	‘(3) Within a year of Royal Assent to the Financial Services Act 2012, the Treasury shall publish a report on measures to improve the stewardship of institutional investments, which may require amendment under subsection (1).’.

Dawn Primarolo: With this it will be convenient to discuss the following: Amendment 45, in clause 14,page64,line8, at end insert—
	‘(3A) In section 73, subsection (1), insert at end:
	“(g) to foster ethical corporate behaviour, including respect for internationally-recognised human rights.”.’.
	Amendment 38,in clause 22, page82,line10, at end insert—
	‘(c) provide for a requirement that an employee representative should be a member of the remuneration committee of a relevant body corporate, and
	(d) provide for a requirement that the remuneration consultants advising on remuneration policy shall be appointed by the shareholders of a relevant body corporate.’.
	Government amendments 5 to 8.
	Amendment 73,in clause 40, page127,line38, at end insert—

‘Complaints by small businesses

234I Small businesses—complaints and proceedings
	‘(1) The Treasury and Secretary of State shall bring forward proposals within three months of Royal Assent to the Financial Services Act 2012 in the following areas—
	(a) to introduce provision for collective proceedings before the court in respect of financial services claims made on an opt-out basis by small and medium sized enterprises; and
	(b) to introduce provision for complaints by small and medium sized enterprises to the FCA that a feature, or combination of features, of a market in the United Kingdom for financial services is, or appears to be, significantly damaging the interests of small business.’.
	Government amendment 9.
	Amendment 74,in schedule 5, page204,line37, at end insert—
	‘(2) In subsection (1) after “approved persons”, insert “and the standards of stewardship expected of approved persons who are institutional investors.”’.
	Government amendments 13 to 17.

Christopher Leslie: This important Bill took a considerable amount of time in Committee, but it was still insufficient to cover many of the amendments that will be necessary to ensure that it is fit for purpose and able to fulfil the job for which it was designed. The Opposition believe that the Bill can still be improved, so many of the proposals we did not reach in Committee or that were not addressed on day 1 on Report are in today’s amendment paper.
	This long group of amendments under the generic title, “Stewardship, etc.” covers a few issues, so I would be grateful, Madam Deputy Speaker, if you would bear with me while I touch on the details. Although amendments 75 and 74 relate to stewardship, other amendments are on different topics, which I should also like to address under this group.
	On amendments 75 and 74, it is important to take the opportunity to ensure that the Bill properly improves institutional investors’ stewardship of pension funds or other savings or investments. Such funds are looked after by others on our behalf. In an ideal world, those who have pensions or other savings would spend time considering where they are invested, and whether they are invested ethically or in sustainable organisations and so forth. For reasons of practicality, however, that is often impossible, and investments are often grouped together in a basket of different products, so following the detail of where funds are invested is incredibly difficult.
	That is why many people choose to use institutional investors—to ensure their best interests are being served. That means ensuring a good and strong rate of return, but many people care about where their money is invested. Most of British industry is partly owned by the collective pension funds of our constituents. They have voting rights through the shares and equity they hold, but they are often exercised without reference to our constituents and delegated to institutional investors to make decisions on their behalf.
	The previous Administration and this one have therefore sought to address the quality of stewardship by institutional investors. Amendment 75 is on the threshold tests in the Bill and the Financial Services and Markets Act 2000 on whether people are suitable or fit and proper, whether they have adequate resources to fulfil their responsibilities, whether they have close links with others in the sector, and so on. The Opposition felt it would be a good idea to ask Ministers to consider whether the array of reforms that should be made to corporate stewardship should be reconsidered in the light of those threshold tests.
	Amendment 74 also looks to the 2000 Act and the general rules of conduct of approved persons and seeks to amend the Bill so that it addresses key aspects of the
	good stewardship agenda. We argued in Committee and earlier that the Bill is a missed opportunity radically to improve the stewardship of some of the key players in corporate Britain, especially those large firms—banks and institutional investors—that have such a direct impact on society at large.
	The stewardship code was brought into force in 2010. We have had reasonable progress, with around 230 asset managers, asset owners and service providers signing up in the first 18 months, but sadly, the Bill does not reference the Financial Reporting Council, which is the UK’s independent regulator responsible for promoting, among other things, high-quality corporate governance. We want the Bill to do more to give regulators a proper and clear mandate to strengthen the stewardship code where appropriate and give them sufficient teeth to ensure that significant culture changes can happen. These things do matter. We have to build a framework that roots out bad habits and addresses what some people have called the principal agent dynamic—the fact that shareholders are often very fragmented and, when faced with unified managers, are often unable to make any headway. Senior executives can sometimes respond only if there is a 50% plus one coalition of shareholders.
	We need to rekindle that dynamic. Some have said that it is time for a shareholder spring or awakening, and there have been some suggestions recently that certain company shareholders, at the annual general meetings and elsewhere, have begun to ask fundamental questions of the senior executives. It is the mismatch between the power that senior executives can have and the lack of power of—paradoxically—the owners of some of these large companies that needs addressing. In legislative terms, we often have debates about firm rules and fixed ways of doing business. Obviously, it would be preferable if the dynamic between owners and managers were able to ensure that we had a healthier, more open and transparent way of doing business.
	I commend those institutional investors who show an active interest in how they use the voting rights of their investors and use that leverage to try and influence positive corporate behaviour by the relevant companies. It must be tempting for many institutional investors, when faced with a company perhaps with a management dysfunction or some behavioural failing, to sell up and walk away from that company. That is too often the history of such shareholding. It would often be far better if shareholders, as owners, could stay and try to fix the culture of the organisations that they own. It is that sort of change that we need to find a way of addressing. Yes, some shareholders will not want to say publicly that they disagree with senior executives, because that could affect the share price and they would therefore be affecting their own financial interests in some ways, but there are several ways in which institutional investors need to have the ability, directly or indirectly, to influence what is going on.
	Protests in recent months have, in some cases, seen the rejection of some of the larger pay deals in big companies—for instance, the executive remuneration packages at Trinity Mirror, Pendragon and Aviva. The banking sector has also seen some significant shareholder disquiet, including at Citigroup with the rejection of the
	chief executive’s pay package. Nearly a third of Barclays shareholders voted against the pay policies in that particular company.
	So there have been some signs that shareholders are becoming interested in that more active role. This is perhaps to commend the work of the Association of British Insurers, which has done good work recently in encouraging its members to take a more active role. Those members account for some 15% of the stock market, and they recently wrote an unprecedented letter to the chief executives of some of the major banks in particular, saying that they were not happy and would no longer tolerate a “business as usual” approach when it came to remuneration, especially for executive directors.
	Those moves are very positive, but we should not feel that the balance between shareholders and executives is sufficient. The persistent imbalance needs addressing in a number of specific ways. For a start, a shadow is often cast across the Atlantic as many institutional investors feel that what are known as the “acting in concert” rules affect them here. To what extent can institutional investors come together and discuss with each other their ability to voice common concerns about the behaviour of managers? I have sometimes heard concerns expressed that this may somehow be in conflict with anti-trust regulations. If the Government could clarify the “acting in concert” rules, it would help to send a clear signal to institutional investors that it is possible to have those discussions, to come together to form a significant majority and to express a view about corporate behaviour.
	As I said, some progress has been made recently on the stewardship code, but the results of some surveys remain slightly depressing. In March, a business bellwether survey conducted jointly by the Financial Times and the Institute of Chartered Secretaries and Administrators canvassed the views of company secretaries from the FTSE 350. It found that 79% of FTSE 350 firms reported that the stewardship code had led to no difference in meaningful engagement, with only 21% reporting a slight difference. Only one in 10 firms had actually met their top 10 shareholders in the past 12 months.
	The culture, then, is not changing radically enough. That is particularly clear with the bonus culture. On numerous occasions, we have debated bank bonuses and the fact that the culture there has not changed sufficiently. We still receive correspondence from many constituents totally aghast at the scale of some awards paid in the industry. The Department for Business, Innovation and Skills has reported on its efforts to curb excessive pay deals and talked, primarily, about the need for a binding shareholder vote on annual remuneration policy. That is welcome, of course, but insufficient, especially if the binding vote on future remuneration policy does not have enough teeth. It has been suggested by many, including some in the asset management industry—Fidelity Worldwide Investment, for instance—that a 75% super-majority might still be necessary. That would make companies consult shareholders far more widely prior to the vote and would maximise shareholder engagement.
	There is a series of other reforms on the stewardship agenda, however, that the Minister needs to consider and encourage the regulators to consider. For example, there is a strong case for simplifying and clarifying how
	executive pay is composed. Just finding out what exactly is being paid in remuneration packages is sometimes itself a high science. A case can be made for a basic salary element to be supplemented with one additional performance-related element to help to ensure that shareholders can clearly comprehend the absolute levels of executive pay. We need greater transparency so that shareholders can understand what is being paid to managers.
	It would be helpful if the reporting of pay packages was more standardised across a range of businesses and included single figures showing total remuneration. The Opposition believe that to increase transparency, shareholders should also be able to see awards that go beyond the boardroom, particularly in the banking sector. We have said that figures for the 10 highest-paid employees outside the boardroom need to be published, again so that shareholders can know what is happening. Let us bear it in mind that these things are not simply a matter of natural justice; they significantly affect the behaviour of those senior executives and the risks they take. If remuneration practices continue to reward excessive risk taking, linked to the exuberant activities that resulted in some of the more dangerous aspects of investments that took place ahead of the global financial crisis, it could ultimately lead to a significant liability for the taxpayer. This is relevant if we are to learn the lessons of the financial crisis.
	There is also a case for ensuring that employees have a greater stake in what is happening within the companies in which they work. The proposal—put forward I think by the High Pay Commission—to publish the ratios of the pay of the highest-paid employees to that of the median would be a good way of ensuring a better sense of how a company was bringing all its stakeholders along in its business plan.
	One of the key issues that still requires action is something basic: the mandatory disclosure of voting patterns by institutional investors. Many institutional investors are beginning to disclose their voting practices. That is a good thing, but in this day and age, that needs to be a basic, minimum requirement. A number of organisations, including FairPensions and others, have been pressing for the change, and the time for action has come. Not only would the mandatory disclosure of the voting patterns of institutional investors help to inform the owners of stock—the investors in companies—of what was being done in their name; it would also promote competition and choice, so that consumers could judge where their investments might best be placed to match their views, whether ethical or environmental.
	My hon. Friend the Member for Wigan (Lisa Nandy) has an amendment in this group, and she will no doubt talk to it in a moment. It is of course important to ensure that regulators and the sector pay greater care and attention to ethical, human rights and sustainability questions. However, I also want the general public—pensioners, and other savers and investors—to have the information about what is being done in their name with their investments. That is why the mandatory disclosure of voting patterns is so important. The Minister therefore needs to trigger the powers in the Companies Act 2006, which are ready to go, so that they are brought into force and the stewardship agenda is promoted, and to do so as soon as possible.
	However, one of the most important reforms to stewardship must be the reform of remuneration committees in large corporations, in particular those in the financial services sector. I hope that amendment 38, standing in my name, will gain some traction with the Minister. Although we debated the matter in Committee, he must surely be persuaded by now of the virtues of ensuring an opportunity to appoint an employee representative as a member of a remuneration committee, and also that remuneration consultants—the specialists tasked with advising on the appropriate, going rate of pay for senior executives—should be appointed independently by the shareholders, not by the managers, who have a vested interest in the outcome of any review. Again, this is a pretty basic corporate governance reform, so I hope that the Government will accept the merits of it.
	I cannot stress enough the importance of ensuring that employees have a better voice in addressing some of these questions. There is an incredible propensity for loss of morale in some of the big companies in this country if the employees feel totally disconnected from the continuous high pay, remuneration and bonus culture that they sometimes see in their own companies. When we have debated the issue in the past, the Minister has said, “We can’t possibly put an employee on a remuneration committee because that would involve a conflict of interest”—that is, because the employee would somehow be voting on their own pay and conditions. There are ample ways of dealing with conflicts of interest; the key thing is that the employee should have a voice to express a view about the ratios of the highest-paid to the typically-paid in a company, to ensure that we do not just have managers commenting on management pay, but that others can comment too. That would lead to a healthy dynamic on remuneration committees, and it is something that already happens in many of our European neighbour industries. We know that John Lewis and other UK companies already follow many of these best practices; I think the time has come for such arrangements to be broadened out.
	It is also important to make sure that we move on from the perception that the remuneration consultants who are hired constantly make recommendations that please the highly paid management in some of these large banks and large corporations. Consultants will, like a sunflower, always face the sunlight and if they feel that their appointment will come by saying the things that please the people making the appointment, they will continue to say those things. There are some great consultants out there, and I do not, in any way, wish to denigrate their integrity, but, generally speaking, the culture can give rise to a perception that something is not quite right in how recommendations are made. So to ensure that those recommendations and the consultants’ behaviour are beyond reproach, it is important that we place this power more firmly and clearly in the hands of shareholders. That deals with amendment 38, and those are the points on the stewardship agenda that I hope the Minister will address.
	Amendment 73 deals with a slightly different topic, as it seeks to amend clause 40. It has largely come about because of recent reports that small and medium-sized enterprises in the UK may have been mis-sold products by some of their bankers. In particular, some SMEs that might have taken out loan agreements were also told that they needed to take out an interest rate swap
	product—a hedge or an insurance against interest rates going too high—and therefore made such arrangements. Increasing concerns are coming to light about the way in which that practice occurred, with serious questions being asked of the commercial banks. This is obviously not of the scale of what happened with personal protection insurance, because that involved many millions of individual consumers being mis-sold a product. We are still in the early stages of finding out just what has happened, so this amendment seeks to bring forward powers giving small firms an ability to complain and to bring proceedings —court proceedings if necessary—to ensure that they could get proper adjudication on whether they were indeed mis-sold a particular product.
	The amendment would do two specific things. First, it would require the Government to introduce proposals within three months of Royal Assent of this Bill to make it easier for groups of small firms to bring collective proceedings—class action suits, as they are often called—before the courts in respect of financial services claims, with the right to opt out for those companies not wanting to be party to the outcome of those cases.
	I have written to the Minister on these points. Several years ago, he debated this issue when it came up during proceedings on the Financial Services Bill in 2009-10. He was then in a shadow role and he argued that the provisions could not go ahead because sufficient consultation had not taken place—the then Government undertook that consultation, partly at his behest. He has now been in office for a couple of years and we have another Financial Services Bill before us, yet still there is nothing in legislation on this.
	In correspondence, the Minister tells me that
	“legislating for collective proceedings through the Financial Services Bill would neither allow for the appropriate degree of consultation or take advantage of the opportunity to learn from the responses to the BIS consultation on private actions in competition law.”
	All our amendment seeks to do is ask the Government to bring forward proposals within three months of Royal Assent. That would surely give ample time for proposals to be formed and for consultations to take place. If the Government cannot legislate now to help small businesses to ensure that, if necessary, they are able to undergo those collective proceedings to get justice in their cases, I do not know when a better time would be. The Minister needs to give us a little more information about the time scales he has in mind and the legislative vehicles he feels might be more appropriate than this Bill. The amendment would also empower SMEs to complain to the regulators, going beyond the collective proceedings in a court, and to give representative bodies the right to complain about market failures—in this case, to the Financial Conduct Authority—in the same way that consumers can complain.
	SMEs are consumers, just as individuals are; and just as individuals can be victims of mis-selling, so can small businesses. There will from time to time be vexatious or malicious complaints about particular products, but they can be dismissed by the regulator. The Minister has helpfully tabled an amendment to clarify that a small firm—it might be an independent financial adviser or an approved person—should not be deemed as a consumer when making a super-complaint. That is a perfectly good amendment, but we need to recognise
	that there is a gap in the legislation when it comes to small firms wanting to make complaints in their role as consumers of financial products.

Stewart Hosie: Is the hon. Gentleman concerned that, if the amendment is passed, financial institutions might stop providing the hedge products against interest rate changes or forex changes that SMEs might need and from which they might benefit? Is there not a slight risk of those products no longer being available, adding to the risk for SMEs over a period of time during which interest rates and foreign exchange rates might change?

Christopher Leslie: I am grateful to the hon. Gentleman, but no, I do not think that is a risk. Amendment 73 does not propose to outlaw interest rate swap products; indeed, it is not specifically related to those particular products. It is really about the powers of small firms to complain and to take proceedings if they feel that they have been mis-sold a particular product.
	On the particular issue in the news about interest-rate swap products, there are some serious questions that the Financial Services Authority and the Minister need to answer. Were those interest-rate hedge products a requirement of loan agreements, or were they optional? Were the minimum and maximum parameters fair and balanced, or was the downside risk always likely to hit the consumer more than the banks? How frequently was there a mismatch between the term of the loan agreement and the term of the hedge product obligation? Sometimes the term of the hedge product obligation continued even though the loan term had concluded. Were there asymmetrical rights to cancel? In other words, could the banks cancel the arrangement for a particular product, with which the consumer or small firm had to continue? Those are some of the key questions.

David Mowat: The hon. Gentleman is right to raise this serious issue. What I do not understand in his amendment, however, is what additional powers it would effectively give to a small business, given that the Financial Services Authority can already investigate all these things. Am I missing something?

Christopher Leslie: When it comes to complaints procedures, particularly about market failure, which the Financial Conduct Authority can look at, there is a trigger that small firms could have, but it is not available in the Bill. Just as the Minister has given super-complaint powers to a certain number of consumer bodies, so a case can be made for doing a similar thing for representative bodies of small firms. I am not claiming that the amendment is drafted to the perfection that the Minister’s officials might want, but I hope he gets the gist—that there is a gap here. Small firms might have written to him, expressing the fact that they feel that they have no power. I have certainly had some of them writing to me to say that they feel intimidated about complaining—to the regulator or to their bank—because of the sheer power that the bank has to withdraw lines of credit if it feels that the boat is being rocked.
	There is an important underlying issue here, which the business community wants addressed. To what extent were small firms told to seek independent advice before signing up to the swap contracts? How widespread was
	the take-up of these particular agreements? I know that the Financial Services Authority is beginning to look at these questions, but I want to see more action and a swifter response from both the Government and the regulator.

David Mowat: Many of us want to see more action, but what I do not understand is the extent to which the hon. Gentleman believes that the FSA does not have the powers to investigate mis-selling of this type. If mis-selling has occurred—the hon. Gentleman provided some good examples of unfair and asymmetric contracts—surely the FSA is already able to investigate it.

Christopher Leslie: Indeed it can, but it is the way of triggering an FSA investigation that is the case in point. The FSA can choose not to listen to the voices of dozens or hundreds of small businesses, not necessarily in regard to this product but in regard to other products in the future. It is a question of giving some power to small firms, as consumers, to trigger an investigation by the regulator. This is not just a pro-consumer amendment; it is a pro-business amendment, as I hope can be agreed on all sides.
	I have spoken about the amendments tabled in my name; there are others on the list. I shall be interested to hear what the Minister has to say.

John Hemming: Let me begin by referring Members to my entry in the Register of Members’ Financial Interests. I think that I should declare registrable holdings in RBS and Lloyds as regulated entities. I have just checked my entry in the register, and note that I have a declarable interest in Highway Capital. It is a stock exchange rather than a parliamentary interest, but I think that it should be declared because it is relevant to the debate. I also founded, and still chair, John Hemming and Company LLP, which supplies software to the financial services sector. Although it is not itself regulated by the FSA, it trades with FSA-regulated entities, so I think that interest should be declared as well.
	My hon. Friend the Member for Solihull (Lorely Burt) sadly cannot be here today, although she attended 16 of the Committee’s sittings. She has, however, passed me certain comments that she has received from interested parties, which she wishes me to raise with the Minister.
	Payday lending has been a substantial issue throughout the debate. My personal view is that it is not a good thing, because it traps people in many circumstances. The question of what is the best way of dealing with it is a complex one, and I think that the Government are entirely right to ask the University of Bristol to investigate it. However, I have spoken to companies in my constituency and have said that I do not think that it is a very good thing.
	In Committee, my hon. Friend the Member for Solihull said that the Bill should explicitly encourage the Financial Conduct Authority to seek to maintain and extend consumers’ access to financial services that meet their needs, and that when making regulatory decisions, it should assess their impact on markets and consumers. It should place value on policy proposals and regulations that increase access to savings, protections and other financial products, and also on financial advice. In the absence of such a requirement, there would be a risk of
	the FCA always being steered towards a risk-averse regulation. Markets might be restricted to large groups of consumers to avoid any consumer getting sub-optimal products.
	The Government seek to encourage the development of simple financial products. If we are to succeed, we must have a regulator working with the grain of the policy rather than acting as an obstacle to it, as appeared at times to be the case with the last Government’s stakeholder products initiative. Does the Minister agree that the FCA now has the “teeth” to engage with the industry and engage in issues such as the maximum number of rollovers that a payday lender should be permitted to allow? Could the FCA set a threshold for market entry? Could it impose on companies real penalties that hurt, rather than the £50,000 limit imposed on the Office of Fair Trading, and make lenders pay compensation to consumers who have suffered detriment?
	Let me now turn to the reflections of industry practitioners. The smallest businesses are keen to ensure that the cost of the regulation to them is not disproportionate. Forty per cent. of credit licence holders are sole traders. What cost-benefit analysis has been carried out for the smallest practitioners?
	What about the implementation time? The Finance and Leasing Association has observed that the less far-reaching Consumer Credit Act took four years to implement. It estimates that implementation of this legislation would take between five and seven years. I am sure that the Government will work with all the professional bodies in devising a sensible implementation plan, but I should be grateful for any reassurance the Minister can give.
	The Association of Independent Financial Advisers is fearful about the lack of a limit on time for complaints, which it says will place a burden on provisions that it will need to make to cover this open-ended provision—

Dawn Primarolo: Order. The hon. Gentleman is speaking quite quickly, but I am trying to follow what he is saying. Will he explain how it is relevant to the amendments that we are discussing?

John Hemming: It is not.

Dawn Primarolo: In that case, it is out of order. Perhaps we should move on, unless the hon. Gentleman is going to speak in order.

John Hemming: rose—

Dawn Primarolo: Order. I should like the hon. Gentleman to do it now. Otherwise I am going to sit him down straight away, given that he knows that he was out of order. Presumably that is why he was speaking so fast. I ask him to speak directly about the amendments.

John Hemming: The Opposition have raised interesting questions about the issues of shareholder activism and the interrelationship between shareholder activists and companies, and I would be interested to hear what the Government have to say in response.

Dawn Primarolo: Splendid; thank you. I call Lisa Nandy.

Lisa Nandy: After that exchange, I rise to speak to amendment 45, which stands in my name and that of other Members, with some trepidation. I shall try to keep to the point.
	The amendment places a duty on the Financial Conduct Authority, in its role as the UK listing authority, to require all applicants to the stock exchange to report on the human rights and sustainable development impacts of their operations. The Minister has said that the FCA needs to be a single-minded regulator. The amendment would not distract the FCA from its strategic objective, but would serve to uphold the integrity of the market and the London Stock Exchange in the fullest sense of that term. As the hon. Member for Hereford and South Herefordshire (Jesse Norman) has said, we must uphold honour and morality in the markets, but we must also maintain Britain’s international competitiveness. The amendment will achieve both objectives.
	Conveniently, the amendment is also in line with the Government’s policy commitments. In June last year, the UK, along with every other member of the United Nations Human Rights Council, endorsed the UN framework on human rights and transnational corporations, which for the first time provides a framework for business and human rights. It was an historic agreement, and the Government are very supportive of it. The Foreign and Commonwealth Office has been particularly enthusiastic in its support for its principles, but so far the Government have not spelled out how they intend to fulfil them. Listing requirements specifically relating to human rights and sustainable development will be a very strong first step. As some Members may be aware, the LSE is currently host to a number of companies that have been found guilty of gross violations of human rights, particularly in countries that are in conflict or deemed high risk, yet very few companies have been held properly to account for such actions.
	Last June, Richard Lambert, former director general of the CBI, wrote an opinion piece for the Financial Times. He said:
	“It never occurred to those of us who helped launch the FTSE 100 index 27 years ago that one day it would be providing a cloak of respectability and lots of passive investors for companies that challenge the canons of corporate governance such as Vedanta…Perhaps it is time for those responsible for the index to rethink its purpose.”
	Our amendment would clarify rather than rethink the purpose of the stock exchange, allowing the FCA to take into account an applicant’s respect for human rights and sustainable development, in protecting the integrity and respectability of the exchange. That has been done elsewhere, such as in Hong Kong, and Istanbul, Brazil, Indonesia, Shanghai, Egypt, Korea and South Africa have all taken steps in that direction.
	Such regulation would not be burdensome on applicants. Publicly listed companies already report on their social and environmental impacts as part of the requirements under the Companies Act 2006. This amendment would simply make explicit the requirement to include human rights and sustainable development in their reports and demonstrate to applicants that the Government do not tolerate or accept failure to respect human rights.
	Apart from the moral argument, there is a strong business case for such requirements. There is increasing recognition that environmental and social factors can have a material impact on business returns and a wider
	impact on reputation. The gulf of Mexico oil spill—which forced BP to cancel its dividend for the first time since the second world war and to report its first annual loss in 19 years—should have removed any doubt that environmental and social issues can be vital to company success.
	One of the virtues of London’s financial services sector is its sustainability, security and stability, yet we are falling behind other countries in our commitment to sustainability. The Bill provides a great opportunity for Ministers to get on the front foot in respect of this agenda. The FCA’s purpose is to uphold the integrity of the markets. I ask Ministers to consider that term in its fullest sense in respect of companies’ environmental and social impacts.
	This is a probing amendment, so I shall not press it to a Division, but I will listen very carefully to the Minister’s response.

John McDonnell: I apologise, Madam Deputy Speaker, for coming and going from the Chamber during the debate; I have been chairing another meeting.
	I congratulate my hon. Friend the Member for Wigan (Lisa Nandy) on the way in which she has promoted the debate on the issue and on her amendment. She has approached the matter articulately and with considerable compassion. She has demonstrated that ability to the House on a number of issues, and I congratulate her on her promotion to the Labour Front Bench.
	I was the Member who assisted in the launch in the House six weeks ago of the report, “UK-listed Mining Companies and the Case for Stricter Oversight”. The report was produced by the London Mining Network and supported by Amnesty International and a range of other organisations. It brought together examples of the operation of companies in the mining sector listed on the London stock exchange and the role that they played in the abuse of human rights, the environmental degradation of vast tracts of countries within the developing world and the overriding of the cultural values of local people.
	The various organisations that came together to launch the report included human rights groups and environmental groups, as well as a number of community and religious groups, and they are looking to the Government for some movement on that issue. As my hon. Friend the Member for Wigan argued, those human rights, environmental and cultural abuses should not take place in the name of British companies listed on the British stock exchange. Any effort the Government can make to give this country’s financial authorities the powers to exert some influence on the operation of such companies is critical. As my hon. Friend has said, such actions are causing such long-term reputational damage not just to the individual companies but to the British financial system that they will eventually rebound on us. The matter needs to be addressed, and it needs to be addressed now.
	When we launched the report, I was moved when I met the groups campaigning on the issue in Peru. I want to give this example not to delay the House but to demonstrate the significance of the amendment and the debate, as well as to suggest a possible route through for
	the Government. This example has gone unchecked by the financial authorities in this country. In 2005, Minera Majaz, a wholly owned subsidiary of the British company Monterrico Metals, was working hard in the northern highlands of Piura in Peru to get its social licence and start the operation of its first copper project. The concerns held by local people about possible environmental degradation as a result of such mining led 1,000 people to march on 1 August 2005 to protest against the mine. They were met by hired thugs who beat a large number of them up; 29 people were held within the mining camp, where they were tortured, and one person was killed. That was done in the name of a mining company that is listed in this country and is therefore considered to be a British company. A number of the women who were detained were sexually abused by the thugs with whom the company had armed itself. There have been some prosecutions and, thanks to the activities of Leigh Day and Co. Solicitors, the human rights lawyers, there has been some compensation. The case was exposed within the British media, too.
	The operation of that company has damaged the reputation of this country in Peru in the long term, so the Government must be seen to act to put in place a regulatory system to prevent that from happening again. The least we can do is take on board the amendment tabled by my hon. Friend the Member for Wigan, which states that one factor to consider when overseeing the operation of a company listed in this country is its “ethical corporate behaviour”. In fact, the UN recently suggested that that was the role of member states, which should put place the necessary legislation and structures. My hon. Friend’s amendment is in line not only with the best interests of human rights and environmental sustainability but with the international obligations being placed on us and preserving the long-term reputation and viability of our financial services industry.

Steven Baker: The hon. Gentleman makes a compelling case, but are not directors already responsible under the Companies Act 2006 for many of the matters he raises? Would it not be more expedient to pursue directors?

John McDonnell: I understand where the hon. Gentleman is coming from but we have tried that and it has not worked. We sought under the recent Companies Act to increase the responsibilities on directors, but unfortunately we were unsuccessful. The evidence that came to the London Mining Network report, which I shall send to the hon. Gentleman, clearly shows that the existing system is not working, and this Bill provides an opportunity to enhance the powers of the regulatory authorities in this country.
	My hon. Friend the Member for Wigan will not push the amendment to a vote. I understand why, although I am a bit more proactive on these matters. May I suggest to the Minister that the Government usefully look at the report and bring together the relevant representatives, including the existing authorities and the new individuals who will sit on the various authorities when the Bill has gone through, to discuss where we go from here? How do we ensure that we have an effective mechanism that includes the monitoring of corporate ethical behaviour within companies that are listed in this country and that gain all the advantages from that,
	such as reputational advantage, but that are doing our country a disservice through their operations in the developing world?

Mark Hoban: I am grateful for the opportunity to reply to this debate. The hon. Members for Wigan (Lisa Nandy) and for Hayes and Harlington (John McDonnell) have raised some very important issues and there is a lot of truth in what they say. The reputation of the UK listing regime depends partly on the behaviour of companies, and we need to think about that quite carefully. However, there are other forums in which these issues should be explored—I do not believe that the Financial Services Bill is the place for it. In the regulatory reforms we have brought forward, we have tried to be very clear about the responsibilities and focus of the new regulators, the Financial Conduct Authority, the Prudential Regulation Authority, and the macro-prudential body the Financial Policy Committee.
	Matters of stewardship and corporate behaviour are predominantly the responsibility of the Financial Reporting Council, which is responsible for the stewardship code and corporate governance issues. I encourage both hon. Members to engage with the FRC on this issue. Of course, it is not only the FRC that is relevant. The hon. Member for Hayes and Harlington talked about the mining sector, and the Government are engaged in that debate. We are a strong supporter of transparency in the extractive sector and we are pressing for requirements to be placed on EU extractive companies to disclose the payments they make to Governments. That is flowing from the accounting and transparency directives. We are also very supportive of the extractive industries transparency initiative, under which companies publish the payments they make to companies in resource-rich countries, so we are aware of the need to increase transparency.

Lisa Nandy: I am grateful to the Minister for giving way, but I urge him to speak to his colleagues, particularly in the Foreign and Commonwealth Office, because this amendment is supported by a wide range of organisations. They include investors and members of the business community, as well as non-governmental organisations that represent those whose lives have been so appallingly blighted by some of the companies that my hon. Friend the Member for Hayes and Harlington (John McDonnell) and I have been discussing.

Mark Hoban: The hon. Lady makes a good point, and if my colleagues in the Foreign and Commonwealth Office are not reading this debate carefully I shall certainly raise the matter with them and ensure that they think carefully about their role. I encourage her to speak to the FRC about these issues.

Andrew Love: The Treasury Committee interviewed members of the Financial Reporting Council this morning. They explained to us that their powers are about implementing or explaining and that they do not have powers to deal with companies that break the rules in this regard. Would it not therefore be appropriate to involve a body such as the FCA, which really could deal with implementation?

Mark Hoban: As my hon. Friend the Member for Wycombe (Steve Baker) highlighted, there is a responsibility on directors and there are criminal sanctions for criminal behaviour. We need to be very careful that we do not duplicate powers that already exist elsewhere and that we do not confuse the role of the regulators. It was the Treasury Committee that highlighted some of the problems in the existing regulatory system with the confusion of roles and remits. We want to be very clear in these reforms about what we seek to achieve.
	The FSA—and in future the FCA—has a role to play. The FSA supports the FRC’s stewardship code through mandatory requirements on asset managers to disclose the nature of their commitment to the stewardship code or to explain their alternative investment strategy. Those powers will transfer to the FCA.

John McDonnell: I hope that what the Minister just said was helpful. Is he saying that the stewardship role that he envisages for the FCA will include an element whereby judgments can be made about behaviour in terms of corporate ethics?

Mark Hoban: I am saying that what we need to ensure in terms of the stewardship code, and what the FCA does, is to require asset managers to disclose the nature of their commitment to the stewardship code or to explain their alternative investment strategy, so the obligation is on asset managers rather than necessarily on companies themselves to disclose their adherence to stewardship matters.

John McDonnell: Will the Minister give way?

Mark Hoban: Yes, but I want to make some progress.

John McDonnell: All right, I will not be a pain any further. To be frank, that does not move the matter on. The Minister need not give an answer on this tonight, but it would be incredibly helpful if he or one of his colleagues met my hon. Friend the Member for Wigan (Lisa Nandy), me and representatives from the London Mining Network to talk this issue through because there is clearly a gap between the different institutions, which corporate ethics seem to fall down when it comes to their being pragmatically adhered to.

Mark Hoban: I am always loth to offer meetings on behalf of colleagues, because it has happened to me, but the hon. Gentleman may wish to approach the Minister with responsibility for consumer affairs, who is also responsible for corporate governance and the role of the FRC. That might be the most productive furrow to plough.
	On amendment 38, the hon. Member for Nottingham East (Chris Leslie) is absolutely right that we have heard it before. It is identical to amendment 150, which we discussed at some length in Committee before rejecting it. I do not think his arguments today were any more persuasive than they were a few months ago. I know that he will find that personally disappointing but I am sure he will get over it. In short, the objectives of each authority are broad enough to enable them to make the rules suggested in the amendment.
	More generally, these issues are better considered in other forums, including those concerned with governance across the corporate sector. I also point out gently to
	the hon. Member for Nottingham East that the Department for Business, Innovation and Skills recently consulted quite widely on executive remuneration and that it included in that consultation both the suggestions that have been made, neither of which received significant support.
	[
	Interruption.
	]
	The hon. Member for Nottingham East says that it depends whom we consulted but it was an open consultation. Views were encouraged from across a wide range of bodies, including investor organisations, and I am sure that institutions such as the TUC and others would have taken part. I know that the Treasury Committee is also looking into this matter, so perhaps the hon. Member for Edmonton (Mr Love) can illuminate us about the conversations he has had this afternoon with Baroness Hogg.

Andrew Love: I thank the Minister. What we were told today was that remuneration committees draw from a very select pool and are heavily influenced by the argument that their chief executive has to be at or above the average of all chief executives and that comparisons are made directly with the United States, which may be inappropriate. It was also made clear to us that we should widen that pool. One suggestion of how that could be done was to put an employee on the remuneration committee. If that is not acceptable, how is the Minister going to address this problem?

Mark Hoban: That is why the Government have embarked upon a consultation to look at ways to enhance the accountability of boards to their shareholders, looking particularly at the issue of executive pay. That is a welcome move and the Government will shortly respond formally to the responses to that consultation. I agree with the hon. Member for Nottingham East that shareholders must play a more powerful role in these issues, and in recent months they have put across their views more powerfully.
	The hon. Member for Nottingham East spoke about the disclosure of voting patterns. As he mentioned, there is provision for such a power in the Companies Act 2006. The previous Government made it clear that they would use the power only if market practice did not improve. The outcome of the stewardship code has been to encourage institutional investors to vote more and to disclose that. The latest Investment Management Association survey of institutional investors shows that 66% of those surveyed now publish their voting records. That is up from 21% in 2004. Professor John Kay, in his review of equity markets and long-term decision making, is considering the issue and will report in the summer.
	Let me move on to Government amendments 7 and 8 and Opposition amendment 73. Amendment 8 makes two minor technical corrections and allows firms and the Financial Ombudsman Service to make referrals to the FCA on matters of mass detriment. Amendment 7 deals with super-complaints. The new provision in the Bill for the FCA to receive super-complaints from designated consumer bodies has been widely welcomed. I am grateful for the scrutiny provided in Committee and in particular for the arguments made by the hon. Member for Makerfield (Yvonne Fovargue), who is in her place, who tabled an amendment in this connection.
	It has never been the Government’s intention that the super-complaints mechanism could be made available to bodies whose purpose is to represent professional investors, but the debate in Committee highlighted the fact that the drafting would allow that. The amendment therefore revises the definition of “consumer” used in the super-complaints mechanism to exclude representatives of authorised firms.
	Amendment 73 seeks to require the Government to introduce a provision allowing for collective proceedings for small and medium-sized firms and to give them access to super-complaints. The amendment has created confusion in the minds of hon. Members about the rights currently available to businesses to make complaints. Paragraph (b) of the amendment suggests that small and medium-sized businesses cannot make complaints. That is not the case, but I shall return to that.
	I deal first with collective proceedings. The Government are consulting on a range of proposals to make it easier for consumers and small businesses to bring private actions in competition law, including on whether to extend to businesses the current right of consumers to bring a collective action following a breach of competition law, and whether to make it easier to bring such actions. We should take the opportunity to learn from the outcome of that consultation and reflect on what the implications might be for the financial services sector before proceeding to legislation. It would not be appropriate to legislate today in haste, without having consulted.
	On access to super-complaints, the provisions in the Bill will not prevent bodies representing small and medium-sized enterprises which fit the relevant definition of consumers from making super-complaints. Within the new statutory framework the issue of what type of consumer body should have access to super-complaints is complex and will require more detailed criteria than can be set out in the Bill. These criteria will be of interest to parliamentarians and to organisations seeking to become super-complainants. I can therefore announce to the House that the Treasury will publish draft criteria for consultation later in the year.
	On paragraph (b) of amendment 73 about the rights of small and medium-sized businesses to make complaints to the FSA, there has been much discussion about the mis-selling of interest rate hedges. I do not want to comment on that directly, as it is a matter for the FSA. However, I can point out that the FSA already has a powerful toolkit that can be very effective. That includes its powers to establish industry-wide or firm-specific redress schemes under section 404 of FSMA, which was recently used in the case of Arch Cru. The FSA is consulting on such an arrangement to help people who lost out as a consequence of the issues at Arch Cru.
	The FCA will have the powers that the FSA already has to refer firms to enforcement, to use supervisory measures, to agree with or require a firm to undertake the necessary remedial action, including carrying out a past business review, and the payment of redress, or obtaining redress for firms through their use of their restitution powers under section 384 of FSMA. There are therefore provisions in place that will help the FSA to tackle complaints of mis-selling that businesses as well as consumers have brought to it. I hope that provides the clarity and reassurance that my hon. Friends are looking for.
	My hon. Friend the Member for Warrington South (David Mowat) picked up in his interventions the confusion that amendment 73 has created. The FSA has the power to take action to help businesses which feel that they have been mis-sold products and to ensure that restitution can take place.

Steve Brine: I am listening carefully to what the Minister says, and I agree that paragraph (b) has caused some confusion and may have planted some hope that did not need to be planted in some of my constituents, who have some sympathy with amendment 73, as do I. The Minister said that the FSA or FCA has a toolkit at its disposal, and I am sure it has been listening carefully to what he has said at the Dispatch Box this afternoon. Will he consider writing to the FSA to make that crystal clear, giving clarity to Members and constituents listening to the debate today?

Mark Hoban: I would not say that amendment 73 sowed seeds of hope. Rather, it sowed seeds of doubt by suggesting that those powers were not available. Of course they are available. I have written to hon. Members in respect of Arch Cru and also about interest rate swaps recently, setting out the work that the FSA is doing in this regard. It is looking carefully at the sales practices of a number of institutions in respect of interest rate swaps and will take action, as appropriate. I can reassure my hon. Friends and those who take a close interest in these matters on behalf of their constituents and businesses in their constituency that the FSA has the powers that it needs to tackle these issues properly and fully and to get to the bottom of them.

Mike Freer: Sadly, I am none the wiser. I have three constituency cases in front of me on this very issue. Two of them include a letter from the FSA which clearly states that this is a matter for the courts to decide and is not part of its remits under the complaints procedure. Can my hon. Friend clarify why the FSA is telling constituents that it is a matter for the courts, but he says it is a matter for the FSA?

Mark Hoban: There are two issues here. There is a route through the courts that any type of consumer, whether retail or a business, can use if they have been mis-sold a product. That is a normal commercial right. What the FSA has identified as a consequence of the number of complaints on the issue that it has received from businesses is that it needed to undertake more work. It started that work in mid-March. It was looking at products that were sold in the run-up to the financial crisis, and as a consequence of its investigations it believed that more work was needed to establish the scale of the problem and to determine what action should be taken.
	There is nothing contradictory about the letter that the FSA sent. Thanks to the efforts of a number of hon. Members who raised with the FSA the concerns of businesses in their constituency, it recognised that they were not just isolated examples and that there was a wider issue that needed to be addressed. Its powers under FSMA enable it to address the problem in the right way. That is a welcome step forward by the FSA.

Andrew Love: Looking at the issue from a small business perspective, small businesses are not allowed, as the amendment proposes, to take collective action on these
	matters through the courts, which is frustrating. They feel that the FSA is not responding to them adequately. There are great delays in the system. The Minister has commented on the legal aspect of collective actions currently going through. May we have some reassurance today that the FSA will act more promptly in dealing with these matters?

Mark Hoban: As a consequence of the reforms that we are introducing, we are giving the FSA, and now the FCA, tougher powers to tackle these problems. The FSA has a much-reduced appetite for risk and a more interventionist approach to tackling matters where there appears to be consumer detriment. Some people feel very uncomfortable with this, but it is right for the FSA to act vigorously in defence of consumers and to take the necessary action to ensure that consumers get a fair deal. The Bill takes that one step forward and that is why we have been keen to ensure that we give the FCA more powers, which it has demonstrated the appetite to use.
	Amendments 5 and 6 require the FCA and the PRA to publish a statement explaining how they consider making the proposed rules compatible with the principles of regulation set out in new section 3B. Given the important framing role of these principles, I agreed with the suggestion made by the hon. Member for Nottingham East in Committee that the Bill should be explicit about the regulator’s duty in that regard, and I committed to tabling the appropriate amendments when the Bill returned to the House. I am sure that the hon. Gentleman will be keen to support them.
	Amendments 13 and 14 are minor and technical and are designed to maintain a position currently provided for in FSMA whereby the FSA is not required to make rules for the FSCS that provide cover over all regulated activities. The amendments ensure consistency with section 214(1)(g), which provides that the scheme may in particular provide for a claim to be entertained only if it is the type of claim specified by the scheme. These are technical changes and I hope that hon. Members will support the Government amendments and reject those tabled by the Opposition.

Christopher Leslie: I am sorry that the Minister has not reacted to the importance of the issues in the amendments that we have tabled today, particularly when it comes to the need for small firms to have a greater capacity to complain or to make collective proceedings when there is lack of clarity about their capability to do so. The issues were raised not only by the Opposition; Government Members also felt it necessary to clarify these issues. The Minister should at the very least have committed to write to hon. Members so that they could pass on to the businesses in their constituencies a clear route map for communicating some of these questions, such as interest rate swap mis-selling. All we sought was that small firms that feel aggrieved should have their concerns taken seriously as consumers of financial products, but hopefully the point has been made in the debate.
	I am sorry that the Minister felt it necessary to reject our amendments on stewardship issues. It is not good enough for the Government to rebut such questions. The Prime Minister had plenty of warm words in January
	when this issue was high on the media agenda, but we have seen precious little action subsequently. The Government are not taking the stewardship issue seriously and it is important that they do so, particularly with regard to the remuneration committees of some of the largest corporations and our banks and the idea that these obscene bonuses and excessive pay packages can continue to roll on. As my hon. Friend the Member for Edmonton (Mr Love) said, the remuneration committees are self-perpetuating. Would it not be a good idea to broaden them out and try to put an employee voice on their panel, and make sure that they appointed consultants in a way that did not conflict with their own management’s vested interests?
	After we have voted on amendment 40, which we debated on day one of Report, on the need to regulate some of the excessive high-cost credit arrangements, I will press to a Division amendment 38 on remuneration committees, because it typifies one of those areas on the stewardship agenda where we need to see action most swiftly. I beg to ask leave to withdraw the amendment.
	Amendment, by leave, withdrawn.

Clause 22
	 — 
	Rules and guidance

Amendment proposed: 40,page80,line2, at end insert—
	‘(2A) The FCA may make rules or apply a sanction to authorised persons who offer credit on terms that the FCA judge to cause consumer detriment. This may include rules that determine a maximum total cost for consumers of a product and determine the maximum duration of a supply of a product or service to an individual consumer.’.—(Stella Creasy.)
	Question put, That the amendment be made.
	The House divided:
	Ayes 225, Noes 266.

Question accordingly negatived.
	Amendment proposed: 38,page82,line10, at end insert—
	‘(c) provide for a requirement that an employee representative should be a member of the remuneration committee of a relevant body corporate, and
	(d) provide for a requirement that the remuneration consultants advising on remuneration policy shall be appointed by the shareholders of a relevant body corporate.’.—(Chris Leslie.)
	Question put, That the amendment be made.
	The House divided:
	Ayes 224, Noes 285.

Question accordingly negatived.
	Amendments made: 5,page93,line43, leave out ‘section 1B(1)’ and insert
	‘its duties under section 1B(1) and (5)(a)’.
	Amendment 6,page95,line9, leave out from ‘with’ to end of line 10 and insert ‘its duties under—
	(i) section 2B(1) or, as the case requires, section 2C(1) or 2D(3), and
	(ii) section 2G, and’.—(Mr Hoban.)

Clause 40
	 — 
	Provisions about consumer protection and competition

Amendments made: 7,page125, leave out line 7 and insert—
	‘(4) Sections 425A and 425B (meaning of “consumers”) apply for the purposes of this section, but the references to consumers in this section do not include consumers who are authorised persons.’.
	Amendment 8,page126,line16, leave out from ‘that’ to end of line 18 and insert—
	(i) if the complaint would fall within the compulsory jurisdiction or the consumer credit jurisdiction, the ombudsman would be likely to make an award under section 229(2)(a) or give a direction under section 229(2)(b), or
	(ii) if voluntary jurisdiction rules made for the purposes of section 227 provide for the making of an award against a respondent or the giving of a direction that a respondent take certain steps in relation to a complainant, and the complaint would fall within the voluntary jurisdiction, the ombudsman would be likely to make such an award or give such a direction.’.—(Mr Hoban.)

Clause 45
	 — 
	Interpretation of FSMA 2000

Amendment made: 9,page128,line30, at end insert—
	‘() omit the definition of “notice of control”;’.—(Mr Hoban.)

Clause 47
	 — 
	Mutual societies: power to transfer functions

Christopher Leslie: I beg to move amendment 72, page130,line38, at end insert—
	‘(g) making provision for the increased diversity of the financial services sector and promotion of mutual societies, including arrangements to measure the number of members of mutual societies, and the market share for mutual societies as a proportion of the UK financial services sector.’.
	This simple amendment suggests that within six months of Royal Assent the Treasury should bring forward proposals to foster diversity in financial services and promote mutual societies. For the avoidance of doubt, Mr Deputy Speaker, I should declare that I am not only a Labour Member of Parliament but a Labour and
	Co-operative party MP. Inasmuch as there are interests involved in that, I am proud to support the Government’s stated intention to promote mutuals. I have before me page 9 of the coalition agreement—I am sure that all hon. Members have it emblazoned on the walls of their offices—where it says:
	“We will bring forward detailed proposals to foster diversity in financial services, promote mutuals and create a more competitive banking industry.”
	It is perhaps not clear that the Prime Minister, the Chancellor and the Minister remember that they made that commitment. Therefore, in an act of generosity—the Minister will recognise the positive spirit in which we have tabled the amendment—we felt it important to suggest that the Treasury might want to enshrine that coalition pledge in statute and to make arrangements to measure the progress that it is making in promoting the mutual societies model. For example, each year the Treasury could publish the number of members of mutual societies so that we could see whether good progress was being made, and publish the market share of the mutual society sector as a proportion of UK financial services.
	The amendment is fairly innocuous, and I hope that it can gain some cross-party support. After all, let us not forget that the mutual sector is all about ensuring that members own and govern their own financial institutions, have a stake in their future, and can set their agenda. That member-owned and member-governed ethos rightly ought to be promoted. Sadly, we have a small mutual sector, but it should be encouraged to grow, and that is the purpose of the amendment.

Gareth Thomas: My hon. Friend is right to say that the Government made that commitment in the coalition agreement. Following their decision not to take seriously the case for Northern Rock to be converted into a mutual, many people, like him, doubt the coalition’s commitment to financial diversity. Is that not a further reason for the Government to take seriously his amendment to put right what they might see as a mistake in the public mind?

Christopher Leslie: I thank my hon. Friend, who is entirely correct. He is an assiduous campaigner for the mutual sector and the mutual model, and he knows more than most about the Government’s failures over the past two years to make headway on this issue, on which they made a promise that remains to be fulfilled. Indeed, he recently wrote an article about how the Queen’s Speech could have been an opportunity to promote the mutual agenda in which he talked about ways in which the sector could be put more at the heart of banking reform. He said that we should consider expanding the credit union and CDFI—community development finance institution—sectors to reconnect banking with its local communities, and that we should look beyond the financial services sector to think about energy co-operatives, employment ownership measures, and co-operative housing tenure.
	It is an important time for us to be debating the issue, because, as you will know, Mr Deputy Speaker, this is the international year of the co-operative.

David Rutley: The part of the Bill before us is mainly about transferring powers between the FSA, the FCA and the Prudential Regulatory Authority, and adding new powers, so I am not sure that it sits very well with the hon. Gentleman’s amendment. Will he explain in more detail why legislative measures are required when such objectives can be measured in other ways?

Christopher Leslie: We are trying to ensure that the Government fundamentally address the question. These provisions give the Minister and the Treasury the power to make by order amendments to many of the rules, statutory instruments and suchlike that affect mutual societies. We think that they should have the capability to measure progress on mutuality in order to help to smooth progress towards fulfilling the coalition’s pledge.
	Given that we have before us a financial services Bill, our constituents would expect us to be talking about firm and defined measures to make progress on diversifying the financial services sector. Unfortunately, they would be disappointed by the Treasury’s progress on that. The Treasury website has a very scant, short set of paragraphs stating the coalition agreement’s desire to promote mutuals. It says:
	“The Treasury is developing policy and delivering legislative changes to…meet this aim.”
	That is basically it—a statement but no substance. I want the Minister to tell us what progress is being made in fulfilling that objective. It is not good enough merely to talk about consolidating existing rules or legislation and wrapping that up as though the Law Commission’s recommendations somehow fulfil Government promises. We want to see more action.

Geraint Davies: Given that there is an appalling sovereign debt crisis in Europe affecting Greece, Spain, and so on, with the possibility of contagion, and given that we learned the lessons about the stability of mutuals following what happened in 2008, does my hon. Friend agree that it is remarkable that the Government are not pressing forward to reduce such risks by increasing diversity and promoting co-operatives?

Christopher Leslie: My hon. Friend is entirely correct. When the Government have an opportunity to return to the market state-owned assets that the Treasury took in the height of the financial crisis, they simply look for a return to the vanilla plc model. They take a business-as-usual approach rather than taking the opportunity to rethink how we might have diversity in the financial service sector and in business operations. Yes, we need some organisations run on a plc model, and we have plenty of those, but why not think about opportunities to promote the non-profit or mutual sector? Northern Rock was a classic case in point. No adequate consideration was given to that option. A member buy-out suggestion would have been entirely feasible, but it was not considered seriously enough.
	At this point, I pay tribute to the all-party group on building societies and financial mutuals. It made a series of recommendations a year ago, urging the coalition to adopt
	“a comprehensive policy strategy to implement its Coalition Agreement commitment to promote mutuals.”
	It stated that the Treasury should be proactive in promoting the interests of financial mutuals within the Government. One of the first conclusions in the summary of its report was:
	“HM Treasury appears to have taken a reactive stance to the mutual sector beginning to deal with important issues such as building society capital, but little else of substance.”
	I do not want to labour that point, because time is short.

Michael Weir: For cross-party purposes, may I say that we will support the hon. Gentleman’s excellent amendment? It is important to push forward credit unions, in particular, as an alternative to high street lenders, which are currently not lending to many people. The Treasury needs to take a more proactive approach to building up existing credit unions as well as creating new ones.

Christopher Leslie: The credit union sector deserves far more support and encouragement than it receives, and previous Governments of all parties have failed to do enough to promote it. The demutualisation agenda of the 1980s and early 1990s significantly reduced the size of the building society sector, and compared with other developed countries mutual providers have a very small market share, particularly in the financial services sector.

Geraint Davies: We used to hear about the share-owning democracy, but there have been tidal shifts in people’s desire to take risks and own shares. Does my hon. Friend agree that we have a moment in time at which we can change direction and have more diverse ownership among the population and a new culture of business? The Government are missing a trick.

Christopher Leslie: Now is the time to think about the culture change that we want to see in the financial services sector. Yes, there are some good plc structures, but we have an insufficiency of good mutuals, building societies and so on. There should be new entrants of that type, and current ones should grow to provide some proper competition to the big banks.

Gareth Thomas: Will my hon. Friend give way?

Christopher Leslie: How can I fail to give way to my hon. Friend?

Gareth Thomas: My hon. Friend is being characteristically generous. One big concern examined in some detail in the all-party group report that he mentioned was about the future of friendly societies. Does he agree that the debate provides the Financial Secretary with a good opportunity to set out how the Treasury is responding to concerns about the effect that a particular interpretation of case law by the Financial Services Authority is having on the future of friendly societies? Their proportion of the insurance market is at risk of going into reverse because of how the FSA has approached the matter, and the amendment may well help to achieve a culture change in the FSA and get its lawyers to adopt a slightly more helpful mindset.

Christopher Leslie: It is important that we have some metrics by which to measure the Financial Secretary’s performance on his coalition promise. After all, it is there in black and white—the Government said they would bring forward not just proposals but detailed proposals for promoting the mutual sector. This is his moment. We want him to explain to us what those measures will be. I am sure he does not believe in putting such promises in an agreement straight after an election and then letting them drift as though they did not need to be attended to. Many people want to see greater diversity in the financial services sector, and it is important that he is held to account.

Steven Baker: Looking at the amendment, I wonder whether it illustrates the tensions in the contemporary labour movement. On one hand, this should be a time of celebration for all those who believe in mutuality, co-operatives and voluntary self-help, because Members of all parties are signed up to the idea. There is a Conservative co-operative movement, and many of us are very serious about it. On the other hand, Labour insists on top-down control and state direction. It wants to enshrine in legislation measurement, management and the direction of Ministers’ performance.
	Is it not time that, rather than insisting on the production of numbers and pretending that the Financial Secretary can direct people to help one another voluntarily and mutually, we eliminated barriers to entry, accepted spontaneous order and encouraged people to build up the bonds of friendship and mutual co-operation? Ministers cannot direct or legislate for those bonds.

Gareth Thomas: Perhaps the hon. Gentleman could describe how the amendment would in some way create a barrier to entry to the financial services market.

Steven Baker: I was not suggesting that it would create a barrier to entry. I was suggesting that it would put in place measurement and management. That may well appeal to some people, but if we want spontaneous order, mutual societies and bonds of friendship, we cannot get them by state direction. There is very little point in measuring the Financial Secretary’s performance when we want spontaneous order and the bonds of mutuality. I do not support the amendment, but like many other Government Members, I certainly support the thrust of the Government’s policy.

John Healey: I congratulate my hon. Friend the Member for Nottingham East (Chris Leslie) on tabling the amendment. He is doing the job that the coalition parties promised to do in the coalition agreement but are failing to do.
	I shall remind the House of a quotation from the coalition agreement. That is the benchmark for the action that the Government have pledged to take, so the House and others can judge them on it. It states:
	“We will bring forward detailed proposals to foster diversity in financial services, promote mutuals and create a more competitive banking industry.”
	I applaud the aim of greater diversity and competition, but missing from that statement is the aim of greater confidence and trust in financial services. My hon. Friend’s amendment captures the aims of diversity, the promotion of mutuals and greater growth in mutuals.
	Crucially, it would also require an action plan from the Government within six months. We have not had one after two years. It would also require regular public reports and stock-takes of progress. I say to the hon. Member for Wycombe (Steve Baker) that those reports would be about not the Minister’s progress but the growth of mutuals, the diversity of the industry and the growth of competition in the sector—all the aims that the Government set for reform.
	Mutuals bring something quite special—a concern about values, not just valuation. That is the root of the consistently greater levels of confidence and trust demonstrated by those who deal with and borrow from building societies and mutuals compared with those who deal with their corporate competitors. Mutuals display a prudence born of concern for and knowledge of their members. If we look back over the past several years, we see that building societies and mutuals have not run the reckless risks that banks and other financial services have. They have not lost their core business purpose and their sense of what they are there to do and who they are there to serve, as many banks and other financial service companies have. Mutuals did not need a public bail-out and did not cost the UK taxpayer billions of pounds to make up for their mistakes like others in the banking and financial services sector did.
	With that caution, however, there is also innovation. Some of the small, local building societies that are active in many of our constituencies across the country have seen their market share increase since the global financial crash. They have been ready to lend to local people—the people they know and serve best in housing markets they know best—in a way that many large, commercial multinationals cannot. They have innovated by linking with local house builders—companies with which they have an established relationship and of which they have a knowledge that cannot be matched by many of their big competitors.
	It is not only the smallest of our local building societies that has demonstrated innovation in recent years; the largest of our national building societies—the Nationwide—was one of the founder lenders in the Government’s NewBuy scheme to support first-time buyers who do not have the capital that family members sometimes provide to help people meet the deposit requirements of many lenders. There are problems and flaws with the scheme, but I want it to work, and I welcome the fact that Nationwide was one of the founder lenders to get that innovation up and running.
	Building societies and mutuals are the unsung success of our British financial services—they are unsung by a Government who promised to do the opposite.

Gareth Thomas: Is not one of the unsung successes of the building society movement that it has sought to maintain an effective and broad-based branch network in the communities from which they grew, which sadly is not necessarily something that can be attributed to the major banks? There were wholesale bank branch closures in the last generation, and they are beginning again.

John Healey: My hon. Friend, who knows far more about this matter than me and many in the House, is absolutely right. At a time when a loss of trust and
	confidence in financial services is evident across the board, that local presence and face-to-face relationship counts for a great deal.

John Hemming: Amendment 72 is a permissive amendment, and yet clause 47(3)(f) mentions
	“making provision that appears to the Treasury to be necessary or expedient in consequence of the provisions of this Act.”
	What will the amendment enable the Government to do by order that is not already possible under that measure?

John Healey: I am disappointed in the hon. Gentleman, because he, too, has a strong track record on this matter, and that sort of nit-picking misses the point of the amendment. The point of the amendment is to hold the coalition parties in the Government to their coalition pledge, which he is unable to do. It is a way of making public two years of failure and saying, “Within six months, you must do better.”

John Hemming: The amendment does not make the Government do anything, because clause 47 states that the
	“Treasury may by order amend the legislation”.
	If the Treasury does not want to do so, it does not have to do so. The amendment does not hold the Government to account. No wonder you are failing as an Opposition; your amendments are badly drafted.

Lindsay Hoyle: Order. I am not failing as an opposition, so I do not think that is parliamentary.

John Healey: I have not seen the hon. Gentleman’s amendments to make the measure not permissive, but a requirement of the Government—Mr Speaker must not have selected it. Clearly, anything in statute would be a significant step forward, as the shadow Minister, my hon. Friend the Member for Nottingham East, has argued. Those on both sides of the House who have an interest could use a permissive measure in future.

John Hemming: Does the right hon. Gentleman believe that we make a man any taller by measuring his height?

John Healey: No, but by measuring height, one makes a statement that height matters. The amendment makes a statement that the coalition pledge on mutuals, and on greater diversity and competition in financial services, matters. That is the purpose of the amendment and the debate. I hope that my hon. Friend presses it to a Division because it will expose the Government’s complacency in making promises and failing to live up to them.

Mark Durkan: I wanted to respond to the hon. Member for Birmingham, Yardley (John Hemming), who seems to rest everything on clause 47(3)(f), on the basis that it could easily include what the amendment proposes. In the same vein, paragraph (f) could mean that there is no need for paragraphs (a) to (e) because it is all encompassing.

John Healey: I am grateful to my hon. Friend, who has an eye for detail that I cannot match—it almost matches the eye of the hon. Member for Birmingham, Yardley (John Hemming).

Geraint Davies: The amendment requires the Government to measure the number of mutuals and their share of the market. In so doing, it brings the Government to account. If there is no point to that, and if we want only what the hon. Member for Wycombe (Steve Baker) called “spontaneous order”, we would not have the Office for Budget Responsibility, and we might as well forget measuring and management. The amendment seeks to bring the Government to account, and should therefore be supported.

John Healey: There is a saying that what is measured matters, and if it matters, measure it. In many ways, that is the core of the argument being made by Opposition Members.
	Sixteen per cent. of those who aspire to own their own home and who borrow to buy do so from building societies. Roughly one in six of us borrows our mortgage from a building society. That significant market share is gradually growing. That is why I have argued that building societies are the unsung success of British financial services. They are certainly unsung by a Government who promised to be their champion.
	In my view, building societies are the quiet strength of British financial services, but it is time that that strength was properly supported by Government policy and action. Mutuals look at the coalition agreement and point to the words on the paper, but they cannot point to the action that followed. The amendment is designed to force the hand of the Minister, the Treasury and the Government. I am surprised that it finds any objection on the Government Benches, because it simply seeks to hold the Government to the promise they made

William Cash: I have found this debate both curious and inconsequential in many respects. There has been a great deal of talk about the technicalities of achieving the objective, but not, as far as I can judge, a great deal about the reasons why mutual societies are so important. However, I share the view expressed by the right hon. Member for Wentworth and Dearne (John Healey) that the coalition agreement, of which I am not an uncritical observer, clearly stated that there should, in effect, be support for mutuals.
	I declare an interest, because my family founded the Abbey National building society and the National Provident in the 1830s and later in the 19th century. The Abbey National is now Santander, and we need only look at what is happening in Spain to hope that there is some ring-fencing for its customers in the United Kingdom. The reason why mutuals are so important is the same reason why John Lewis is so important. It is the reason why the co-operative movement, which was founded in Rochdale—I do not apologise for also pointing out that that was where John Bright was born—is important. The Rochdale co-operative movement was the means whereby people could buy houses that they could not otherwise afford.
	I have always been very much in favour of the right to buy, because having a property stake is important for individual responsibility. The great thing about the mutuals—and it still pertains, because they still exist, but need to be enhanced, improved, developed and encouraged—is that they enable people to come together in a proper and balanced relationship, with a sense of individual responsibility and, by co-operating together,
	to benefit each other and society as a whole in relation to the most fundamental aspects of property and insurance, without excessive profits, or indeed any real profits, for the people who put it together. That does not mean that I am against capitalism. Indeed, those who promoted mutual societies were invariably capitalists, and I count my own family in that number. William Cash founded the National Provident with the Lucas family, and the Cadburys were much involved in similar objectives. A raft of Quakers and other Dissenters were integral to the development of this incredibly important movement, which changed the face of society in the 19th century. We could do with that now.
	Some five years ago, I wrote a letter to The Times, criticising aspects of the manner in which the banking system had given way to greed and self-indulgence. The Minister knows my views on the subject of the transfer of jurisdiction from the City to Brussels, including the point that legislation is no substitute for self-help. My hon. Friend the Member for Wycombe (Steve Baker) understands that better than anyone else. Indeed, Samuel Smiles, who wrote the famous book on self-help, was devoted to all these objectives because he knew that individual responsibility, operating within the framework of co-operatives and mutuals, would and should provide the kind of society that is worth living in. I put it as high as that, because to me this is a moral objective. We do not talk enough about morality. Law is no substitute for morality.
	Clause 47 enables the transfer of functions and it states:
	“The Treasury may by order”—
	which is permissive—
	“amend the legislation relating to mutual societies for any of the relevant purposes.”
	It then sets out a whole list of functions, in a technical and somewhat boring manner, but there is no sense of the purpose that lies behind that, or the intentions and objectives, let alone any of the virtuous advantages that would come from increasing the degree and range of mutuals throughout the country, so that we could get away from the idea that the only way in which insurance or property ownership can be achieved is through technical, legal change. That will not change things. I would like to know from the Minister how all this ties in and how it is intended that the integrity objective—set out on page 17 of this enormously long Bill—will produce the results that are claimed for it in relation to the transfer of functions relating to mutuals.
	In my judgment, mutuals do not need to be given the regulation, tight analysis and legal requirements set out for the purposes of restraining greed and self-indulgence by people who have no idea about markets and their virtues. Markets are virtuous. However, as I wrote during the Lloyd’s crisis, bad markets are bad for business. That is true. If the mutual system is really good, and is accompanied by protection for shareholders—I refer back to my Protection for Shareholders Bill which I have proposed over and over again since the 1980s; I sent a copy to the Prime Minister just the other day—they then have a stake and are able to restrain bad practice. That is how to do it, not by piling on more and more legislation, whether it is domestic and done under the
	aegis of the law of this land, or under the jurisdiction of Brussels. It does not make much difference, because law is no substitute for proper behaviour.
	The problem of the last 40 or 50 years is that more and more legislation has been passed, as I said in my letter to The Times, which has narrowed the competence of those who are subject to it and increased its complexity to the point where there are literally acres of pages of legislation, most of which is completely impossible to understand for anybody except that unique bunch of people who happen to make a great deal of money from it in the City. I am not criticising them for taking advantage of that—law has always required interpretation —but I am certainly criticising successive Governments, including the Government who preceded this one, for piling on more and more complicated legislation, which requires the attention of an amendment of the kind before us tonight.
	The amendment is permissive, but then the provision itself is permissive. Legislating to provide for amendment of other legislation in relation to mutuals will not necessarily be in any way improved by interpretation in the courts of the words
	“the integrity objective is: protecting and enhancing the integrity of the UK financial system…The integrity of the UK financial system includes…its soundness, stability and resilience…its not being affected by behaviour that amounts to market abuse…the orderly operation of the financial markets, and…the transparency of the price formation process”.
	This is legal jargon that will be interpreted by the courts. Will it make any difference, though, if mutuals are not fostered, developed and encouraged in line with what the coalition agreement originally stated? Will it produce the intended result—that people spontaneously and with moral purpose determine the new kind of society we move into?

Gareth Thomas: Will the hon. Gentleman accept that one lesson regarding the regulation of building societies, friendly societies and other financial mutuals arising from the inquiry by the all-party group on building societies and financial mutuals, to which my hon. Friend the Member for Nottingham East (Chris Leslie) referred, was that regulators did not put enough time and effort into understanding the mutuals market and that this simple amendment will help to prevent a repeat of that scenario?

William Cash: It may well. It behoves the Government to take this kind of amendment very seriously, despite drafting imperfections. It is important to the integrity of our financial system and, above all else, the sense of individual ownership in a mutual context for this movement not merely to be nudged along but to be massively encouraged. The more people have a stake as a result of being in a mutual condition, the better society will be.
	I am completely in favour of capitalism—that might disappoint Opposition Members—but each category of activity in financial markets requires its own remedy, and the mutual system is vital to ensuring that there is a proper balance in society and that those who, for one reason or another, cannot get on to the capitalist ladder in the way that some can have the benefit of mutuals and can share in the prosperity that others provide. I regard that as a very important objective.
	Even if the amendment is not perfect, the intention behind it is important. Wrapping the whole thing up in jargon—some of us are very familiar with jargon—will not solve the real problem in the way that mutual societies can. I hope, therefore, that the Minister will give careful attention to the objectives and purposes of mutuals, in the context of the amendment, and not simply say that the Opposition are talking nonsense or that the Opposition spokesmen are trying to be troublesome and criticise the coalition agreement. It is time we grew up, actually. By that I mean that instead of constantly talking about the Opposition as if they were simply trouble making and mischievous, we should recognise that in such matters we are trying to achieve something worth having.

Christopher Leslie: Hear, hear!

William Cash: The Opposition spokesman says, “Hear, hear”, but I do not want to give him too much encouragement. We need to understand, however, that the objective behind the Opposition’s amendment is important, not because of party politics but because it is about having a stable, good and fair society. That is what we should all be seeking.

Andrew Love: It is a great pleasure to follow the hon. Member for Stone (Mr Cash), whose strictures I shall try to address. First, however, I want to appeal to the Minister, who, I know, is personally sympathetic to mutuals: this will be a modest contribution that tries to reflect his own coalition manifesto commitment to foster diversity and promote mutuals. In answer to the hon. Member for Wycombe (Steve Baker), I say that the amendment seeks to do that by trying to measure the strength and complexity of the mutual movement using the regulator.
	No one has said why we would want to foster diversity and promote mutuals. I want to address that question, because it goes to the crux of what the hon. Member for Stone talked about. First, members benefit greatly from membership of mutuals. The tables of the best savings rates or lowest mortgage rates are populated by mutuals, which provide basic but risk-averse financial services—exactly what the ordinary consumer is looking for. Of course, the reason they can provide such services is that they do not have any shareholders and, therefore, no demands for dividends each year, allowing them to deliver their services efficiently.
	Perhaps even more importantly, mutuals provide a consumer benefit by offering a competitive spur in the marketplace. The hon. Member for Stone says he believes in capitalism. I believe in a market system, and competition is a very good spur, and that is exactly what the mutual movement provides. The reduction in the number of building societies has meant that they have not been able to provide a stronger spur, which provides another reason for the amendment.
	Mutuals provide choice in financial services. Does someone want a mutual member benefit or to contribute to shareholder value? People will make that choice in all sorts of ways, for all sorts of reasons, but it is important in a marketplace to have choice. We are confident that people will choose mutuals, because all the studies and polling of consumers of financial service show that
	mutuals are more popular and, perhaps more importantly, more trusted than their plc rivals. That is a very important consideration.
	Why move the amendment now, other than to reflect the coalition agreement? Currently, the marketplace is dominated by the plc model, which is unhealthy. We all know what happened in the lead-up to 2007 and 2008: heightened risk, and the search for yield followed by the credit crunch. I am not suggesting that the Government are not taking steps, including in this Bill and forthcoming legislation this Session, to address some of these problems. I am saying that there developed a monoculture—group-think—in which everybody thought exactly the same. We need to avoid that. This modest amendment will help us to do so.
	The amendment will also address the danger of the one-size-fits-all attitude displayed in recent years by the regulator, who did not deal effectively with life funds for friendly societies and mutual insurers. At the heart of the ongoing dispute is the failure to understand the essential difference between a mutual and a plc. The amendment would go some way to address that. The regulator now admits that the Financial Services Compensation Scheme, which was introduced some years ago, got it wrong by basing what each organisation had to pay on deposits, discriminating directly against building societies. There was no understanding or empathy in the regulator to address the issue. The Minister will say to me, “But the FSA has now updated its regulatory role. It’s opened a department to deal with these specific matters.” That is all to be welcomed; however, I hope that the Government will welcome this amendment, which represents a small step towards creating greater understanding and trust in the regulator’s dealings on these matters.
	There is nothing sinister about this amendment. Yes, we couch it in terms of the manifesto commitment, but it is really about recognising that we need diversity in the marketplace, to avoid monocultures developing, to give choice to consumers and to create a competitive spur. If we can do all that, this amendment will provide some modest support in ensuring the continuation of the mutual movement in our country—a movement, it has to be said, that is small by international standards. Mutual insurers, along with what we would call building societies and credit unions, are much more prevalent in other marketplaces—including in the Netherlands, Germany, France and even the United States—than they are here. This modest amendment would go some way to addressing that and ensuring that the consumer—the member—got a fair deal in the marketplace.

John Hemming: I think there are two issues in this debate. First, everybody agrees that mutuals are good. They are good in a number of ways, one of which is that “boring” is good in finance. We need more boring finance —we need things that will not double one day, fall by a half the next, and go bust by next Wednesday. We have had too much “interesting” stuff in finance; we need some more boring stuff. Building societies have always been relatively stable—nothing much has changed; things are gradual, with perhaps a few mergers. Some building societies have suffered as part of the financial problem,
	and in other countries some credit unions have suffered. I should declare what is perhaps a non-declarable interest, namely my membership of Citysave, Birmingham city council’s credit union.
	I think there is a major role for such bodies—the hon. Member for Stone (Mr Cash) highlighted the issue of people having a stake in society. That is a very good thing, as is the fact that mutuals look to serve their depositors—often they will be depositors and borrowers. To that extent, I welcome the fact that the Opposition have raised this issue for discussion. The difficulty is that the amendment—it is a permissive amendment; it allows, for instance, the number of members of mutuals to be counted—is the sort of thing that would be done anyway. A mutual could be sent an e-mail saying, “How many members have you got?” It really does not require a statutory instrument to—[ Interruption. ] The hon. Member for Nottingham East (Chris Leslie) says from the Opposition Front Bench that the number of members of credit unions is not being tracked. However, the amendment does not require it to be tracked, as he knows.

Mark Durkan: The hon. Gentleman makes the point that this is a permissive amendment, but it is actually an amendment to a permissive clause, which anticipates that there may, for various reasons, be all sorts of changes. However, in transferring the functions relating to disparate types of mutuals and so on, surely it is right to suggest that someone should have regard to ensuring that mutuals as a sector are promoted and that somebody should measure what is happening. If those in the coalition are committed, why do they not want to be able to know or show what is happening?

John Hemming: The amendment does not compel anything to happen; it merely makes it possible, if the Government wish, to change the law if necessary—which it almost certainly is not—to measure the number of members of credit unions. The Opposition may be right that the figure is not being measured, although that would surprise me, as the industry bodies will almost certainly have total numbers of members. If we contacted the Council of Mortgage Lenders, for instance, and asked how many members the building societies in the council had, it would probably give us the answer. Getting the answer should not be that difficult; however, as the amendment does not compel the Government to do anything, it will have no effect if accepted.
	I return to the point that we have to welcome the fact that the issue of mutuals is being kept on the agenda. I would be interested if any Opposition Member wanted to liaise with me over the coming months to see whether we could find the answers that the amendment makes it possible to find—which are probably possible to find anyway, if the Government wish to find them. Indeed, I would have thought that the Government would not be that averse to knowing what the market share was.

Christopher Leslie: This is a very confusing speech. The hon. Gentleman is in an honoured position, speaking on behalf of the Liberal Democrats. They helped to write the coalition agreement, so he has a responsibility to say what progress is being made on the detailed proposals to promote mutuality. Do the Liberal Democrats agree with that objective, and, if so, what are they doing to achieve it?

John Hemming: I think it is a good idea to encourage mutuality. There is no question about that. As for asking me, randomly, to answer such detailed questions on what the Government are doing, I must admit that I am not a Minister. This is, admittedly, a debate about mutualism, however, and I am quite happy to do a certain amount of research to see whether I can find the answers that the amendment would allow the Government to find—if they wished to do so by changing legislation, which almost certainly is not necessary.
	That brings us to the nub of the problem with such an amendment. It would have almost no effect, because if the Government wanted to find out how many members the building societies had, they would simply ask the building societies, without going through the process of tabling a statutory instrument, whether through the permissive approach or whatever it may be.
	On that basis, although we should welcome the fact that the issue of mutuals is being kept on the agenda, it would be better done by an amendment that had some effect.

Mark Durkan: I had not originally intended to speak to this amendment, as time is tight and we need to make progress. I have also dealt with some of the points in interventions.
	The Government say that they are committed. This Bill gives them an opportunity to go a bit further on that commitment. That is what the amendment offers them. The Government have said that they want to encourage mutualisation. I have heard Ministers talk about the damage done by the rampant trend towards demutualisation in the past—they have blamed that on others, as well as perhaps accepting some blame on behalf of a previous Government. However, clause 47 is a permissive clause, and there is good cause for saying that if the Treasury amends legislation dealing with mutuals—let us remember that we are talking about industrial and provident societies, building societies, credit unions and friendly societies—and if it transfers functions to the FCA, the PRA or both, given that the clause provides that functions can be transferred between different bodies, the Treasury should, in making those arrangements and exercising those powers, have regard to ensuring that someone can measure the size of the mutual sector overall and show progress where that is relevant. That is what the amendment would provide for. Such information will be relevant for Parliament’s interests and purposes—I am sure that future Treasury Committees will want to know what is happening and who is responsible for measuring such things, rather than relying on the market players. The information will also be hugely important for consumers, because if, as the hon. Member for Stone (Mr Cash) said, we are to encourage more people to have confidence in this option, then the more people we can show are using it successfully, the better.
	When the hon. Gentleman suggested that the mutual sector would, by its nature and character, not need detailed regulation and legislation, it occurred to me that he was going off in a different direction. Given the experience that some of us had with the Presbyterian Mutual Society and others, I can say that mutuals do need to be regulated by their nature, so that people can be sure that they are living up to the good name that they properly have. Consumers embrace mutuals on the
	basis of that confidence. They need to be able to rely on the fact that legislators have put in place a regulatory system to ensure that what they are getting is what they think they are getting.

William Cash: I would not want the hon. Gentleman to misunderstand what I meant. It is not that I do not think that there should be a degree of regulation. Rather, I am concerned about over-regulation to the point where the purposes of mutuals, as with so many other sectors of society, are sucked out by a vast amount of oppressive legislation, which is so bureaucratic and impossible for people to understand that they cannot see the wood for the trees. The whole objective of the mutual arrangement is that it is very much a personal relationship in a society to enable people to benefit one another.

Mark Durkan: I thank the hon. Gentleman for that clarification. That brings us to the point that we go through all this complicated legislation, with all this complicated jargon, to try to give consumers confidence that a regulatory regime is policing these matters for them, so that they know that the people they are entrusting with their money—their savings and so on—are performing to a due and proper standard. I would not want the House to create a situation where people felt that mutuals were, by their nature, less safe and less regulated, because non-mutuals would use that on a predatory basis in their marketing.

John Hemming: Let us come back again to the amendment. I noted, on the internet, a report from the Building Societies Association indicating that in 2011 the market share of the mutual building societies increased by 16%, which contrasts with growth of 3% and a figure of 7.7% in the whole market. So the coalition Government are obviously delivering on their promise to have a larger mutuals sector, and the information has already been measured.

Mark Durkan: The information may well be measured by that group of building societies. In terms of industrial and provident societies and others, surely it makes sense that the Treasury will want to make provision on who measures the different sectors or who measures them in aggregate terms as the mutual sector—this amendment would allow that. We must remember that, as the hon. Gentleman says, the amendment is entirely permissive, and it would be set in a clause that is permissive. The clause is meant to demonstrate the coalition’s commitment to mutuals.

Jonathan Evans: May I apologise for the fact that I missed the beginning of this debate? The hon. Member for Nottingham East (Chris Leslie) spoke for the Opposition, and he knows that I chaired the mutuals inquiry to which he refers. Is the problem not the one outlined by the hon. Member for Edmonton (Mr Love): the amendment is modest? I do not think our inquiry was seeking that modest a response from the Government. We are looking for something that matches up to the commitment made in the coalition agreement, and what is being proposed is very much short of that.

Mark Durkan: I thank the hon. Gentleman for that intervention, as it shows exactly why people should be worried. If the best argument that Government Members
	can make is that this amendment is modest and merely permissive, people should be worried that the Government are opposing and rejecting such a straightforward, common-sense amendment.

Geraint Davies: I shall be brief, Mr Deputy Speaker. The coalition Government say that they want to encourage diversity in the market and increase the proportion and number of mutuals, yet they refuse to agree with measuring the number of mutuals or their market share. Anybody who is serious about any policy should want to measure it in order to manage it and show that it has been successful; otherwise they come across as completely hollow. Given that we have the Office for Budget Responsibility and so on measuring important things such as outputs and economic performance, I cannot understand why we cannot include mutuals as part of that portfolio.

David Rutley: I understand the hon. Gentleman’s strength of opinion, but is he not aware that these data are readily available? We need only go to a market research firm or to researchers in the City to find that the data are readily available.

Geraint Davies: But as I have just said, if that is the case why do we need the OBR? We could go on the internet, like the hon. Member for Birmingham, Yardley (John Hemming) did, and then say, “I’ve got a figure from a reliable mate in the City.” This is completely absurd—

John Hemming: rose —

Geraint Davies: Here comes another absurd intervention.

John Hemming: Just for clarification, I looked up the BSA figure for the market share of mutuals, and it indicated that the market share was increasing. The BSA is not a friend of mine in the City, and the information is already being measured and reported on.

Geraint Davies: My point is that second-hand information is available in all sorts of marketplaces, but the Government make a great virtue of the OBR, and of other reliable and robust statistical sources, in order to measure the effectiveness of the outcomes of their policies.

John Hemming: rose —

Geraint Davies: I hope that this intervention is not just another repetition of the same thing.

John Hemming: It is difficult to see where the OBR comes into all this; it is not being handed the task of measuring things.

Geraint Davies: This is about having the reliable and consistent measurement of data in order to measure the effectiveness of policies, rather than having to rely on looking at the website of whatever trade association we are talking about. That is the essence of this amendment and it is why I support it.
	The hon. Member for Stone (Mr Cash) mentioned the Rochdale pioneers, and I am glad that he did so. At that time, the idea of co-operation, co-operatives and mutuals was forged very much in the fire of unbridled capitalism and an economic Darwinism that I know some hon. Members would like to see return in the so-called “spontaneous order” of things. In that unbridled free market, the weaker members of society were being crushed, and a collective, mutual ownership emerged, through mutual societies and co-operatives, that enabled normal people to share risks, benefits and ownership, and to reinvest surpluses in their mutual. That is why those organisations grew, and I am very proud consistently to a have supported them.
	One of the questions that arises is: why has there been a slight falling away of mutuals over the past few decades? Partly it has been because the Conservatives pushed demutualisation to get quick profits for their friends, who are involved in the capitalist system to make quick profits. Then, in 2008, we have this tsunami and suddenly people wake up in the debris of this chaos realising that some of the surviving organisations are mutuals, and they rightly ask why that is. The answer, of course, is that the focus of mutuals—their raison d’être—is not about just reaching out to maximise profitability and taking irresponsible risks; it is about delivering services for their members, who have equal shares. As a result, the time of mutuals is back.
	This is a time of enormous global financial turmoil. We all know about the risks from the sovereign debt of Greece, Spain and elsewhere, and the knock-on impacts of that. We also face a great deal of risk from German banks and other financial institutions that do not have the inherent solidity and risk management of the co-operative system. If the Government are serious about this, now is the time to move forward. The coalition Government have said that they will move forward, but they cannot even be bothered to measure the market share and the number of mutuals. So how seriously can we take them? The answer, self-evidently, is: not seriously at all. The top management consultancy McKinsey has the mantra, “If you can’t measure it, you can’t manage it.” That company knows that that is self-evidently the case, but we are saying here, “We don’t really want to manage it. We won’t measure it. It does not really matter.” That is what is coming across, and it is a great shame that it is.
	Labour Members are saying, “Let’s paint a picture of how things are changing. Let’s try to use that to make progress and to actively encourage credit unions, housing co-operatives and so on.” Such organisations tend, by their very nature, to be locally owned, with local benefits for local people. That contrasts with the situation described by the hon. Member for Stone, whereby a member of the Royal Bank of Scotland may find that Santander has suddenly sent them part of their bill, and they wonder why that is and whether there is a risk from the Spanish contagion, linked into the Greek risk. Somebody was mentioning that sort of situation to me the other day, and of course it arises because of the global nature of these organisations.
	People want the security and assurance of knowing that they can go to local co-operatives and be offered loans if they save, whereas they would be excluded from high street banks, which would say, “You’re too poor. We can’t give you an overdraft”, but if people were in a
	credit union they could get one. A lot of this is about risk management and stability, but it is also about ethics. We know that mutuals—the Co-op in particular—are trying to promote fair trade, sustainability and so on. If we are serious about encouraging risk management, and a better and fairer future for all our communities with mutuals, we should be serious about pushing forward the top line of this amendment—that to manage it, we should measure it. I very much hope that the Minister will accept this modest amendment.

Mark Hoban: We have had a wide-ranging debate on mutuality, and it has acted as a peg for discussion. As is clear from this evening’s contributions, we all recognise the strength of the mutual sector, its importance in providing choice and diversity, and the benefits it brings. A couple of times, however, Opposition Members seemed to elevate mutuals into semi-religious institutions. Let us be realistic about some of the issues that mutuals faced during the crisis. Some mutuals had to be bailed out by others, and the first use by the previous Government of the special resolution regime was on the Dunfermline building society. A number of mutuals strayed from their core business model, which had consequences.
	One hon. Member—I think it was the hon. Member for Harrow West (Mr Thomas), who is no longer in his place—referred to mutuals supporting their branch network. I recall that one of the first Adjournment debates I replied to as a Minister was as a consequence of Nationwide closing a number of branches in south-east London. All mutuals face commercial pressures, which needs to be acknowledged.

Geraint Davies: What the Minister says is true, but does he accept that there is a differential outcome and that, on balance, because of the lower-risk structure, the mutuals do better than conventional capitalist banks?

Mark Hoban: It depends on risk management and the business model that mutuals follow. There is a different set of constraints around building societies, which helps to ensure their stability, but that does not mean that they are immune from some of the mistakes that have caused failure in the past.
	The clear intention of the Bill—we discussed this at length in Committee—is to ensure that regulation does not discriminate against mutuality, or indeed any other type of ownership, simply because it diverges from the norm of public or private ownership. I believe that the Bill delivers that result. For example, in clause 22, new section 138K requires the Prudential Regulatory Authority and Financial Conduct Authority to analyse the impact of the proposed rules on mutual societies. This will help to build up a base of impartial evidence to allow the regulators to continue to assess whether mutuals are being treated appropriately within the regulatory system. It is important that regulators think through very carefully the impact that their rules will have, particularly on mutuals.

Jonathan Evans: My hon. Friend will recall coming to our all-party group on insurance and financial services, when we asked him some questions on these issues. In fact, the regulator thinks that the Financial Services Authority has changed its processes in order to recognise the specific position of mutuals. What it is that the Government have changed, other than their even-handed approach?

Mark Hoban: The new duty in the Bill goes beyond what the FSA currently does. It imposes a requirement separately to identify the impact of regulation on mutuals. Let me continue my remarks and set out some of the other things we have done to promote mutuality. As I was saying, the regulatory principle of proportionality also bites in this regard. If the regulators are taking action that impacts on one type of firm more than another, it should be done on the basis that the action is necessary and proportionate.
	Let me highlight a number of ways in which the Government are promoting mutuality outside of this Bill. In January this year, the relevant provisions of our Legislative Reform (Industrial and Provident Societies and Credit Unions) Order 2011 came into effect, allowing credit unions to grow faster and compete better by offering interest on deposits and admitting corporate bodies like local charities and firms as members.
	My colleagues in the Department for Work and Pensions recently commissioned and published a report on enhancing the sustainability of the credit union sector. It looked at some of the initiatives undertaken by the previous Government, how they have helped the credit union sector and how best to take that work forward. Important recommendations were made to the Government that will help to enhance the sustainability of credit unions and ensure that if there is further public sector investment in them it will be used to expand their base and ensure that they are sustainable.
	The capital requirements directive, CRD4, includes a capital instrument that is available for use by mutuals and building societies. That was not on the agenda when we came into office two years ago. It is a consequence of the work that this Government have done with their European partners to ensure that that instrument can enable building societies to issue capital instruments so that they can expand and deal with some of the challenges they face. A number of Members of the European Parliament, as well as the Government, have been working to ensure that within CRD4 a particular capital instrument is available for the Co-op, which, because of the nature of its ownership, falls outside the instrument that is available to building societies.
	The Prime Minister announced earlier this year that we intend to bring forward a Bill to consolidate most legislation governing co-operatives and mutuals. The industry greeted the announcement of this Bill warmly, and I believe it is important to bring forward this consolidation. Ed Mayo, the secretary-general of Co-operatives UK, stressed the importance of bringing together a series of nearly 20 Bills or Acts of Parliament, which will make it easier and cheaper to establish co-operatives and remove some of the ambiguity in the sector. Co-operatives UK is looking forward to working with the Government to bring forward this consolidation Bill.

Andrew Love: The Minister has already admitted that credit union deregulation goes back many years. I was frustrated by the lack of progress under the previous Government; it has taken us a long time to get here. As for a consolidation Bill, I asked the Secretary of State for Business, Innovation and Skills why it was not included in the Queen’s Speech, given that it is a relatively modest and non-controversial measure—yet the Government could not give enough priority to it. Is there not some concern—

Lindsay Hoyle: Order. The hon. Gentleman spoke earlier and interventions are meant to be short, not to be another speech.

Mark Hoban: Consolidating something like 18 pieces of legislation is not a simple task. It needs to be done properly and well, and we would need to do it in conjunction with the co-operative movement, as well as with the Law Commission. Other pieces of legislation need to be implemented before the introduction of the consolidation Bill. It represents an important step forward, which is why it has been welcomed by people like Ed Mayo as a way of making it easier to set up mutuals in the future.
	In the Government’s response to the recommendations of the Independent Commission on Banking, we committed to assess whether the Building Societies Act 1986 should be updated in line with the reforms to the wider banking sector. We want to work with building societies to identify the barriers to their growth. We will shortly publish a paper, alongside the White Paper on ICB implementation, as a consequence of that work, to identify where the Building Societies Act 1986 needs to be amended to enable building societies to take advantage of the opportunities that are out there.
	I believe that this Government have demonstrated a clear commitment to promote mutuality and to diversify the mutual sector. Our commitment takes its shape in many forms—whether it be the new capital instrument, the protection given to members of Northern Ireland’s credit unions, legislation to help to take forward and grow credit unions, or the increased public investment in credit unions that should flow from changes to the model on which they operate. That demonstrates the practical concrete steps that the Government are taking to strengthen the mutual sector.
	The information requested by the amendment is clearly widely available, if my hon. Friend the Member for Birmingham, Yardley (John Hemming) can Google it in a minute, and it will be maintained and kept. I do not think that this requirement to provide information, placing additional burdens on the regulator and the sector, is necessary. Actions speak louder than words and they speak louder than data. What this Government have clearly done is bring forward a series of measures to strengthen the mutual sector, which will be to the benefit of all our constituents.

Christopher Leslie: “Actions speak louder than words”: that is the conclusion that the Minister reached when rebutting this modest amendment. Some Opposition Members said that it was too modest, and not strong enough. You cannot win when you are in opposition. Sometimes Opposition Members propose amendments and are told that they go much too far, but it seems that this amendment did not go far enough.
	The aim of the amendment was simply to hold the Government to account in respect of their own promise in the coalition agreement to produce detailed proposals to promote mutuality. The Minister tried his very best. My hon. Friends could probably hear the sound of the barrel being scraped as he listed all the papers, reviews and consultations—half of which, by the way, had their genesis under the last Labour Government, or were thanks to the European Commission.
	The Government’s commitment to mutuality is conspicuous by its absence. They have an embarrassing dearth of commitment to the mutual sector. The Minister must do far better than this. As my hon. Friends have said, it is no wonder that the Government do not want to measure the progress that is being made in any modest way. I think it is time that we held them to account.
	Members in all parts of the Chamber care about the mutual sector. I greatly respect the work that is being done by the all-party group, and the commitment of others who believe that it is important for us to take the steps that are necessary to support the mutual and co-operative sector. All that we were trying to do was obtain from the Government some sense of how they were doing in relation to the coalition agreement, but the best that we have been able to secure is a scraped-together consolidation Bill that does some administrative tidying up. It is not good enough, and I therefore wish to press amendment 72 to a Division.

Question put,
	That the amendment be made.
	The House divided:
	Ayes 218, Noes 271.

Question accordingly negatived.
	More than three hours having elapsed since the commencement of proceedings on consideration, the debate was interrupted (Programme Order, 23 April).
	The Deputy Speaker put forthwith the Question necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).

Clause 58
	 — 
	Directions under section 57: supplementary provisions

Amendment proposed: 10,page136,line22, leave out from ‘Bank’ to ‘on’ in line 23 and insert
	‘must give the Treasury one or more reports’.

Clause 97
	 — 
	Orders: parliamentary control

Amendment proposed: 11,page165,line21, at end insert—
	‘() an order under section 91 (power to make further provision about regulation of consumer credit);’.

Schedule 10
	 — 
	The financial services compensation scheme

Amendments proposed: 13,page240,line8, leave out ‘are, or are not, to’ and insert ‘may, or may not,’.
	Amendment 14,page240,line10, leave out ‘are, or are not, to’ and insert ‘may, or may not,’.

Schedule 18
	 — 
	Further minor and consequential amendments

Amendments proposed: 15,page288,line18, at end insert—
	(c) in paragraphs (c) and (d), for “notice of control” substitute “section 178 notice”.
	‘(2A) In subsection (2)(b), for “notices of control” substitute “section 178 notices”.’.
	Amendment 16,page288, leave out lines 20 and 21 and insert—
	‘(4A) “The appropriate regulator”—
	(a) for the purposes of subsection (1)(a) and (b), is the regulator to which the application for permission under Part 4A is made;
	(b) for the purposes of subsection (1)(c) and (d), is the appropriate regulator as defined in section 178(2A).
	(4B) “Section 178 notice” means a notice given under section 178.”’.
	Amendment 17,page288,line24, leave out sub-paragraphs (2) to (5) and insert—
	‘(2) In subsection (1)—
	(a) for “the Authority”, in the first place, substitute “a regulator”,
	(b) in paragraph (a), for “subsections (7) to (9) of section 52 do” substitute “section 55X does”, and
	(c) in paragraph (b), for “Authority” substitute “regulator”.
	(3) In subsection (2)—
	(a) for “the Authority”, in the first place, substitute “a regulator”,
	(b) in paragraph (a), for “section 52(1) and (2)” substitute “subsections (1) to (3) of section 55V”, and
	(c) in paragraph (b), for “Authority” substitute “regulator”.
	(4) In subsection (3)—
	(a) for “the Authority”, in the first place, substitute “a regulator”, and
	(b) in paragraph (b), for “Authority” substitute “regulator”.’.

Schedule 21
	 — 
	Transfer schemes

Amendments proposed: 18,page315,line22, after ‘this’ insert ‘Part of this’.
	Amendment 19,page316,line11, leave out ‘the scheme’ and insert ‘a scheme under this paragraph’.
	Amendment 20,page316,line18, after first ‘this’ insert ‘Part of this’.
	Amendment 21,page317,line2, at end insert—

Part 2
	 — 
	Property, rights and liabilities of Office of Fair Trading

Interpretation
	6 In this Part of this Schedule “the OFT” means the Office of Fair Trading.
	Transfer schemes
	7 (1) This paragraph applies if after the passing of this Act the Treasury make an order under section 22 of FSMA 2000 which has the effect that an activity—
	(a) ceases to be an activity in respect of which a licence under section 21 of Consumer Credit Act 1974 is required or would be required but for the exemption conferred by subsection (2), (3) or (4) of that section or paragraph 15(3) of Schedule 3 to FSMA 2000, and
	(b) becomes a regulated activity for the purposes of FSMA 2000.
	(2) The OFT must make one or more schemes under this paragraph for the transfer of property, rights and liabilities of the OFT to the FCA.
	(3) A scheme under this paragraph made by the OFT is not to be capable of coming into force unless it is approved by the Treasury and the Secretary of State.
	(4) The OFT may not submit a scheme under this paragraph to the Treasury or the Secretary of State for their approval without the consent of the FCA.
	(5) Sub-paragraph (6) applies if —
	(a) the OFT fails, before such time as may be notified to it by the Treasury as the latest time for submission of a scheme under this paragraph in connection with an order falling within sub-paragraph (1), to submit such a scheme to the Treasury and the Secretary of State for their approval, or
	(b) the Treasury or the Secretary of State decide not to approve a scheme that has been submitted to them by the OFT (either with or without modifications).
	(6) Where this sub-paragraph applies, the Treasury may, with the approval of the Secretary of State, make a scheme under this paragraph for the transfer to the FCA of such of the OFT’s property, rights and liabilities as appear to the Treasury appropriate to be transferred to the FCA in consequence of the order falling within sub-paragraph (1).
	(7) The property, rights and liabilities which are the subject of a scheme under this paragraph are transferred in accordance with the provisions of the scheme on such day as the scheme may specify.
	(8) The OFT must provide the Treasury or the Secretary of State with all such information and other assistance as either of them may reasonably require for the purposes of, or otherwise in connection with, the exercise of any power conferred on the Treasury or the Secretary of State by this paragraph.
	(9) In the following provisions of this Part of this Schedule a scheme under this paragraph is referred to as a “transfer scheme”.
	8 The property, rights and liabilities that may be the subject of a transfer scheme include—
	(a) any that would not otherwise be capable of being transferred or assigned, and
	(b) rights and liabilities under a contract of employment.
	9 A transfer scheme may—
	(a) apportion, or provide for the apportionment of, property, rights and liabilities,
	(b) define the property, rights and liabilities to be transferred by specifying them or by describing them (including describing them by reference to functions that are transferred by the order falling within paragraph 7(1));
	(c) contain provision for the payment of compensation by the FCA to the OFT;
	(d) contain provision for the payment of compensation by the OFT or the FCA to any person whose interests are adversely affected by the scheme;
	(e) contain supplemental, incidental, transitional and consequential provision.
	10 A transfer scheme which relates to rights and liabilities under a contract of employment must provide for the transfer to which the scheme relates to be treated as if it were a relevant transfer for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 2006.’.
	Question put (single Question on amendments moved by a Minister of the Crown), That amendments 10, 11 and 13 to 21 be made—(Mr Hoban.)
	Question accordingly agreed to.
	Amendments 10, 11 and 13 to 21 agreed to.
	Third Reading

Mark Hoban: I beg to move, That the Bill be now read the Third time.
	It is worth stepping back at this point to look at why this is such a crucial Bill and why we must get it right. The UK banking system is emerging from the most serious financial crisis in over 100 years. It was a global crisis, but in the UK it highlighted fundamental dangerous flaws in the existing tripartite system of regulation. That system was put in place by the previous Government and designed by the shadow Chancellor—a system that, because of its flaws, failed its first major test.
	The Bill addresses the most serious weaknesses in the system. Currently, all responsibility for financial regulation rests with the Financial Services Authority, resulting in an unwieldy remit across prudential and conduct-of-business regulation. The conflicts and challenges involved in that dual mandate were highlighted in the recent FSA report on the failure of RBS. The Bank of England is responsible for financial stability, but it did not have the tools with which to effect change, and the Treasury has no clear remit in a crisis, in spite of the immense threat to public funds in such scenarios. The confusion and lack of clarity in respect of roles and responsibilities triggered the asking of this question: who is in charge? The system’s structural flaws were compounded by flaws in approach. The FSA’s focus on tick-box compliance in the run-up to the financial crisis meant that insufficient time and resource was dedicated to thoughtful and challenging analysis of risk.
	The Bill gives a clearer mandate to the regulatory structure and ensures that the regulators are equipped with the powers they need to tackle the problems both of today and, crucially, of the future. The Bill gives the Bank, through the new Financial Policy Committee, a much clearer mandate to protect financial stability and
	the ability to develop and use levers to fulfil that role. In Committee, we discussed at length the remit of the FPC and the tools that would be required, and I reconfirm what I said then: we will consult on the macro-prudential tools later this year, to ensure that there is full public discussion of them and their effects both in the outside world and here in Parliament.
	In response to questions about who should be the prudential regulator, and recognising the close synergy between macro-prudential regulation—the task of the new FPC—and micro-prudential regulation, we have established a new subsidiary of the Bank of England: the Prudential Regulatory Authority. The PRA will have a new emphasis on a judgment-led approach to regulation. We will ask it to act proactively and to look ahead at problems that may emerge. The PRA will be empowered to act to tackle problems before they emerge, rather than waiting to clean up afterwards.

Andrea Leadsom: Does my hon. Friend agree that it is important that the PRA and the FPC consider the need for greater bank competition in the UK? Does he also agree that it is important that when the Bill moves into the other place consideration is given to any changes that might encourage greater competition through the new PRA?

Mark Hoban: The FPC’s remit does not cover the consideration of competition in the system. Its role is to consider stability and the threats to it. On the question of the Prudential Regulatory Authority, one of the challenges we need to accept is that, for a host of reasons, the failure of a bank is costly and expensive. We saw that in the UK with the response to the banking problems during the crisis, when a huge amount of public money was pumped into banks to prevent some of the problems that bank failure would create. Part of the responsibility for tackling the problem lies with the previous Government, who introduced living wills through recovery and resolution plans in the Banking Act 2009, work which is now being taken forward.
	Of course, the Vickers report includes in its recommendations ways in which it will be easier to allow the orderly failure of a bank. Helping a bank to have an orderly failure where there is a problem will help to tackle the problem with barriers to entry. At the moment, the cost of failure is so high that the barriers to entry are proportionately higher. The regulators want to know that a bank is safe and to have huge confidence in that bank and they will require it to have high levels of capital because the cost of failure is so high. If we can tackle the barriers to exit from the banking sector, it will be easier to tackle the barriers to entry. That will help enormously in improving competition.
	We have also given the Financial Conduct Authority an explicit objective of improving competition in markets. We have strengthened that objective, taking into account the work of the Treasury Committee and the representations of others, and I believe, as I think my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) does, that competition plays an important role in improving outcomes for consumers. That is why we see competition as one of the key new roles for the FCA, which will be a specialist regulator of conduct and will have strategic
	objectives not just to promote competition but to focus on consumer protection and to ensure that markets function well and have integrity.
	We have also listened to the widespread concerns about the regulation of consumer credit. The Bill gives us powers to transfer the responsibility for regulating consumer credit from the Office of Fair Trading to the FCA. That will bring significant benefits and will ensure that consumer credit is well regulated. The FCA has a wider range of penalties than the OFT and can take a wider range of enforcement action, which will help to reassure our constituents that we are tackling the issue of consumer credit properly and sensibly.

Andrew Love: The Minister will recognise the continuing concerns about the powers given to the Governor of the Bank of England and, indeed, to the Bank. What changes is he likely to make to address the governance arrangements to ensure that those powers are used wisely?

Mark Hoban: The hon. Gentleman makes an important point. I emphasise that it is the Bank of England that is getting more powers, as I do not think we should be personalising matters in the context of who within the Bank will get more power. It is the institution that will get more power. We have taken steps in the Bill to increase the accountability and transparency of the Bank. It is very important, for example, that the FPC, in explaining its actions, uses the financial stability report to communicate the risks it identifies and what its responses should be. I expect that the FPC will be held to account by business, the banking sector and this House. That is important but, as I said on our first day on Report, the Treasury Committee has raised a number of issues—I pay tribute to the work of the Committee and its Chair in highlighting them—and we will return to them in the other place.
	It is important to get the arrangements for the governance of the Bank right. I believe that accountability and transparency should be at the heart of the regulatory system, which applies not just to the regulators but to some of the tools that we have given to them, which I think will help. For example, at the moment no one knows when a financial promotion has been withdrawn at the direction of the regulator, but that information will now be made public, which will help consumers to know which financial services firms push the boundaries with promotions. That is why we want to see the publication of warning letters. I know that that is controversial, but it is right that consumers should know when enforcement action is being proceeded with and that that information should be in the public domain. The powers we are giving to the FCA to ban toxic products are also an important strengthening of that regime. In a range of areas, we are changing not only the structure of the regulatory organisation of this country but the approach. Transparency and accountability are part of that, as are the increase in competition and the new powers that we are giving to the FCA.
	The process of scrutiny has been constructive, I think, and I pay tribute to the Treasury Committee for its work. We also had pre-legislative scrutiny of the Bill by a Joint Committee of both Houses chaired by my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley). As we have developed the Bill, the way in which we have listened to the arguments being made inside and outside Parliament has demonstrated that
	we listen carefully to what is said and will amend the legislation as appropriate. We passed a number of Government amendments on Report that reflected comments that were made—even those made by the hon. Member for Nottingham East (Chris Leslie). That just shows that we are prepared to listen. The fact that there has been such widespread support for the Bill in the Commons demonstrates that our aim to ensure that there is widespread consensus behind our reforms to the structure and approach of regulation was achieved through the consultation process we adopted. That consensus is important. It demonstrates confidence in our proposed changes and shows that this Bill should receive its Third Reading.
	I hope that the Opposition are not going to oppose Third Reading. If they do, it will demonstrate that they have not learned the lesson of the past—[ Interruption. ] The deputy Opposition Chief Whip says, “You never know,” from a sedentary position, but if the Opposition vote against this Bill on Third Reading people will wonder whether they are so wedded to the constructs of the past that they cannot move on. People will think that they are so wedded to the system put in place by the shadow Chancellor that they cannot move on and that they cannot recognise the flaws in both its structure and approach. If they choose to vote in such a way, the world will know that they have not moved on and that they have not learned those lessons.
	The Government have looked at the financial crisis and the reforms that must be made. The structure we are proposing today will help to deliver better outcomes for consumers and to strengthen and improve the resilience of the financial system in the future. I commend the Bill to the House.

Christopher Leslie: Let me start by thanking those of my colleagues who served on the Committee that considered the Bill, as well as the trade bodies, consumer groups and others who made representations about it. In particular, I thank members of the Treasury Committee for the time and attention they gave to trying to improve the legislation. I thank also the members of the pre-legislative scrutiny Committee, who did a phenomenal amount of work in the months ahead of the legislative process, albeit to make a series of recommendations that the Government then promptly ignored. However, we will come to that when the Bill goes to the other place. I pay tribute to my hon. Friend the Member for Foyle (Mark Durkan). His contributions were from a different political party but he made a very constructive contribution to the Committee. I also thank the officials and others who work hard behind the scenes on legislation such as this.
	It is a shame that we have had such woefully insufficient time to debate this massive piece of legislation, which consists of more than 300 pages and hundreds of clauses. We tabled more than 200 amendments but the best we could get from the Government, even though they have nothing else going on in the Chamber—they are padding out the legislative process—is one and a half days, with three hours for the second day on Report. We ran out of time to debate some of the key, critical issues concerning how the Governor of the Bank of England and the Chancellor of the Exchequer would manage in a crisis, and we did not even get an opportunity to debate those
	crisis-management arrangements. However, I am glad that we extracted one major achievement from the Government and No. 10: when it comes to public funds, when there is a direction to the Bank of England from the Treasury, the Government will now require the Bank to report back on its progress on that direction. That is a positive change, which we did not get a chance to debate in discussions on the previous section of the Bill. I am grateful for the change.
	When it comes to some of the other problems to do with crisis management, the Government are relying on a non-statutory memorandum of understanding between the Bank of England and the Treasury, which leaves gaping holes in knowing how things would work in a crisis. They say that there will be a temporary standing committee or an ad hoc committee but there is no sense of who will be on it or how it will be constructed. No advance thought is going into that and I worry that if we get into a crisis we might waste hours or even days figuring out how on earth to convene this ad hoc committee.
	Similarly, there are serious difficulties to do with whether the heads of the new regulators and bodies that the Bill creates will have a direct line of communication with the Treasury or whether everything will have to be filtered through the Governor of the Bank of England, in whom enormous new powers will be vested under this legislation. There is an irony in that yesterday or the day before the Bank conceded—this was dragged out of it—that it ought perhaps to have minor reviews and partial inquiries into what went on in parts of the financial crisis. We still have not had a fundamental review by the Bank of England about its role in the crisis, and that is a great shame. It should be big enough and have the humility to undertake the review that the Treasury and even the FSA have undertaken. It is time that the Bank also opened up and looked inwardly and seriously at its own capabilities.
	There are positive aspects to this legislation. We agree with the concept of prudential regulation and we wait to see the detail. The Minister said that he is going to consult on some of the macro-prudential tools. It is very important that we get right the concept of the greater systemic overview of the system—the eagle-eye view that needs to be taken rather than getting too bogged down in the detail of firm by firm, company by company regulation—but the theory needs to be translated properly into practice. That is where the devil is in the detail. In a number of respects, the Bill falls short and could have done with massive improvement. The Opposition tried their best to make recommendations, including many of those made by the pre-legislative scrutiny Committee and the Treasury Committee. I sometimes see the Minister as—I will not call him an irresistible force—an immovable object resisting time and again attempts to improve the Bill.
	We need more transparency and accountability for the regulators that the Minister is creating. The degree to which the new Financial Conduct Authority will publish its minutes is still unclear—we need a firmer commitment from the Government on that—and as I have said, the crisis management memorandum of understanding is still insufficient. There is a severe risk that costs that firms pay in their levies to the new regulators will be duplicated and that there will be inefficiency in the expense of splitting the regulator and
	having two new regulators. We know that the PRA is already in aggrandising mode, securing beautiful new offices in Moorgate right next door to Threadneedle street because, apparently, Canary Wharf is far too far away. It is about 12 or 13 minutes on the tube, but apparently that is a major problem. So millions more pounds are to be spent on those offices in Moorgate, and the Government have resisted attempts to bring about greater efficiencies by means of the Bill.
	The key aspect that is missing is proper attention to the necessary parliamentary scrutiny of those macro-prudential tools. Many of our constituents would baulk at that phrase and ask what on earth it means. It is about the regulator and the Bank of England deciding, for example, that the minimum repayments on their credit card may need to change at a moment’s notice. The Governor of the Bank of England will have the power to say, “I’m sorry, we’ve got a particular issue coming on, so instead of paying back 2% a month, you’ve got to pay back 10% a month on your credit card.” The Governor of the Bank of England will have the power to intervene on business lending, on the terms and duration of loans, and possibly even on the cost of those loans, and will be able to do that at a moment’s notice.
	We have a bit of a debate about whether loan-to-value ratios and loan-to-income ratios on mortgages will also be in the hands of the Governor. Interestingly, one of the deputy governors has said, “This is a bit too hot to handle. Maybe this is for the Treasury, which is accountable to do that.” The point is that there are phenomenal powers invested in the Bank of England, and we need that thread of accountability to come back to Parliament at some point. This is why we have suggested that there should be a super-affirmative process, rather than a rubber-stamping statutory instrument Committee which many Members have attended and where they know orders go through on the nod with a formal vote.
	I detect some cynicism on the part of the Government Whips, but of course they want to nod these things through. We should give Parliament a proper opportunity to consider the impact of those phenomenal powers on our constituents and on the economy. I hope that in the other place the Government will think again about the need to improve the parliamentary scrutiny of the new powers.
	When it comes to consumers, the Bill has not properly addressed what we wanted to see, particularly the powers of the Financial Conduct Authority. There has been no movement on compulsory financial education. The Money Advice Service, which is the body tasked with trying to improve the financial literacy of the population, will not be adequately focused in statute on the most deprived in society and those who are most financially excluded. We saw the Government rebut attempts today to give the FCA a proper mandate on the regulation of high cost credit. The Government refused to give the FCA a proper role to take account of social investment, charity finance and other needs. We know they have a chip on their shoulder about charities and philanthropy generally, but it is a shame that they did not recognise those needs in the Bill.
	There are a number of consumer aspects, whether debt management plans, helping customers plan ahead for their mortgage finances, or giving firms a fiduciary
	duty to have regard to the best interests of consumers, on which the Bill should have been improved. We have spoken separately about how the corporate culture in the financial services sector could have been improved. Today we tried to press the Government on improving the stewardship, the corporate governance arrangements and the actions of remuneration committees in reining in some of the excessive bonuses and pay packets.
	It is with particular reference to the impact on the economy that I close my remarks on Third Reading. A powerful new committee is created in the Bill—the Financial Policy Committee, which will make the decisions about macro-prudential tools. It will be under no proactive obligation to have regard to growth and employment in this country. We may well see a mismatch between the obligations under which the Monetary Policy Committee remains: it must have regard to the growth and employment objectives of the Government, but the FPC does not mirror that obligation on the MPC. It is told, “Don’t do anything to harm growth”, but it is not given an obligation to have regard to the Government’s proactive—we hope—strategy on growth. Maybe that is because they do not quite understand what the growth agenda ought to be, or they do not know how to get there. They cannot see why that is important. In addition to that general obligation, it is also important that there should be an assessment of the impact of each of the macro-prudential tools on the economy—on growth and employment—but the Government have neglected to do that. Also, there was not a sufficient duty placed on the Bank of England to take care of public funds. Those are some of our concerns.
	The Bill does not properly fit with the European level of supervision for financial services. There is the sense that it was dreamt up on the back of a cigarette packet by the Chancellor in opposition, when he wondered how the previous administration, the FSA, could be blamed for all the ills of the global financial crisis. But he forgot to recognise that most of the financial regulations in this country come from Brussels, the EU and Commissioner Barnier, on that conveyor belt as it throws out all the directives and regulations. The regulators that we are creating in this legislation are merely there to transpose a lot of the decisions taken in Brussels. That is essentially their function. The Bill does not properly recognise how our regulators should fit with the European decisions and those realities. We should be framing legislation not just to influence those European decisions, but to steer those decisions. The Government still have not addressed that point properly.

David Mowat: The hon. Gentleman makes the point that the twin peaks structure that we are implementing here does not fit with the European sectoral structure. Is it the Opposition’s position that we should have had a sectoral rather than a twin peaks Bill?

Christopher Leslie: I am pointing out that there is a fundamental mismatch. We know that the supervisory authorities have gone for a thematic approach and the Government have gone for a twin peaks approach. Then there is this bizarre committee or secretariat in between to try and be an interlocutor. It is a tremendous spaghetti, diluting our influence on those supervisory decisions. We can already see that the Government have had to cave in on a number of ways in which the European Banking Authority
	can overrule many of the capital requirement arrangements. Perhaps that is the result of a deeper weakness in the Government’s diplomatic stance.
	I am not saying that the Bill cannot be salvaged. There are ways in which it falls short, but there is still time for the Government to listen. The Bill is deficient, but it can be improved, and I hope that the noble lords in the other place will take the opportunity to do so. We agree with the concept of prudential regulation. There is virtue in some of the theory in the legislation. But it is because of the way in which the Government are yet again incompetently putting that theory into practice that we have our doubts. We will not oppose Third Reading, but I hope that the other place, perhaps with the more time that they have under the rules, will do a serious job and pick up on some of the issues that the Government, by timetabling the Bill in such a draconian way, failed to give the House of Commons the proper opportunity to do.

Andrew Tyrie: I much agree with the sentiment of the remarks of the hon. Member for Nottingham East (Chris Leslie) a moment ago, and I will elucidate a little on some of the points that I think their lordships might want to look at. The Bill is the most important overhaul of financial regulation ever undertaken in this country, and it has implications for the health of the whole economy and affects everybody—every citizen, every business up and down the land. Along with the forthcoming banking reform Bill, it will change the landscape of our financial services industry, in which we lead the world in many areas and on which so many jobs in the UK depend.
	The legislation certainly leaves this place in better shape than it might have done, which I think has something to do with the number of amendments that have been tabled and arguments that have been listened to by Ministers. Sometimes those arguments have come from those on the Opposition Front Bench, sometimes from the Public Bill Committee, sometimes from the Joint Committee, and sometimes from the Treasury Committee, which I chair. On that, I would like particularly to thank my colleagues with whom I work on the Committee who have been so helpful and generated so many ideas, helping put together the succession of reports that we have put out. They have, to some degree, influenced the shape of this Bill.
	None the less, it is the Treasury Committee’s considered conclusion that the Bill is still defective in a number of respects. On the first day on Report, the Committee proposed a new clause to make the court more transparent and to require it to act more like a proper board. The Bank must have a board that is capable of assessing the institution’s performance, but it is explicitly prohibited from doing so at present. In view of the Minister’s favourable response to that new clause in the debate a few weeks ago, I look forward to seeing movement on the issue in another place. A number of other defects remain in the Bill, a few of which I will list in a moment.
	It is important to put on the record one or two other points. Right from the beginning, the Government made decisions about the reform and the timing of the Bill
	that, in my view, have made the legislative process more complex and difficult than it could have been. For a start, we should have had a new Bill, something on which the Governor of the Bank of England and the Treasury Select Committee wholly agree. The complexity of the Bill could turn out to make it a lawyers’ charter—I only hope not.
	Then there is the rush to get all this done quickly. After all, the horse has bolted. We have just had a most serious financial crisis; a crisis of the sort that we might have hoped the legislative framework would have protected us from. We now seem to be legislating to what can only be described as an arbitrary timetable in order to get the Bill through by the end of the year. Neither I nor the Committee have heard a good reason why we cannot take a few more months to get the legislation right. That meant that the Bill was produced without taking into account a number of views, including that of the Treasury Select Committee, on the shape of the Financial Conduct Authority. Some of the Bill’s current weaknesses owe something to the fact that not enough attention was paid to those views. We must therefore depend on the other place to get the legislation right.
	I will briefly summarise a number of areas to which the Treasury Select Committee has drawn attention and which I hope the other place will look at. First, I have already mentioned the new clause that my colleagues and I proposed for improving accountability, and I am glad that there has been Government movement on that.
	As I said on Report, all proposals to improve accountability, both of the Bank to its board and to Parliament, should be judged against two criteria. First, does the proposal hold out the prospect of improving the performance of the institution, meaning the quality of public policy decisions that the Bank will take, and secondly, does the proposal help secure public consent for the decisions? That is particularly important in a powerful body that is remote from the citizenry, such as the Bank of England. On both criteria, and particularly the second, the appointment and dismissal of the Governor would benefit from a parliamentary veto. The Treasury Committee’s second point is that the independence, authority and, in a sense, legitimacy of the Governor’s decisions will be enhanced if there is a parliamentary veto, through the Committee, over the appointment and dismissal of the Governor.
	Thirdly, the Financial Policy Committee and the court should publish full minutes. The Government’s proposed compromise, that a so-called record be published, simply will not do and will not be enough to satisfy the Treasury Committee. We will inevitably end up demanding the full minutes and, one way or another, will persist until we get them.
	Fourthly, the Chancellor needs a general power to direct the Bank of England in a crisis when public funds are at stake, not the rather strictly circumscribed powers the Bill currently contains. The Government picked up part of the proposal that the Committee made in our report on the need for some kind of limited power of direction for the Chancellor over the Bank in a crisis in order to deal with the problem to which the previous Chancellor has alluded, not least in his rather graphic memoirs of that period. The measure that the Government are proposing to put on the statute book might deal
	with the current crisis, which we have had over the past few years, but it might not put at the Chancellor’s disposal the right tools in some future crisis.
	Fifthly, there needs to be enhanced scrutiny of the secondary legislation that will accompany the Bank of England’s macro-prudential tools. The hon. Member for Nottingham East referred to exactly that when he talked about the need for a super-affirmative procedure, and the Treasury Committee agrees: we must have something that provides for full debate and time to consider the proposals, except in case of emergencies.
	Sixthly, the MPC and the FPC should both have a majority of external members. We on the Treasury Committee think that, in the longer term, this is essential in order to guard against group-think on those committees.
	Seventhly, the Lords needs to look again at the Financial Conduct Authority’s objectives. The FCA would work better if it focused on a single set of objectives. Midway through the process, the Government added to the proposals what they describe as overarching strategic objectives, but the Treasury Committee concluded that they add nothing to the operational objectives in the Bill and might, indeed, take something away by creating confusion.
	Eighthly—but by no means last, and certainly not least, although I probably will end on this point—the Financial Conduct Authority’s accountability mechanisms need strengthening. The FCA should publish its minutes, its chief executive should be subject to pre-appointment scrutiny and it should review its own performance without the need for the Treasury Committee to force it to do so. The Committee managed to get the Financial Services Authority to review the collapse of RBS, but it was hard work persuading it to do so.
	The Financial Conduct Authority has been the poor relation throughout this process of parliamentary scrutiny, and regrettably the legislation carries over into the new body many flaws—the box-ticking culture, the burdensome problems of regulation, its cost and some of the regulation’s apparent pointlessness—in existing FSA practice, so I very much hope that their lordships get their teeth into that problem.
	Overall, therefore, this legislation is a big step forward from the legislative framework that was in place at the time of the crash, but much more could be done to improve it further. It really could be so much better, and there is still time to do something about it. Let us hope that, when it comes back from the other place, that work has been done.

Mark Durkan: It is a privilege to follow the hon. Member for Chichester (Mr Tyrie), the Chair of the Treasury Committee. Like him, I recognise that the Bill represents an improvement but that it is capable of being improved further in a number of respects. He has touched on some issues, such as the balance of membership on the MPC and the FPC, which we addressed in Committee, and the future accountability of the new regulatory players.
	There are deficiencies, and the hon. Gentleman at the very end of his remarks touched on what for some Members in Committee was a difficulty: when we put
	forward many amendments, we were told by the Minister that they were not necessary or were redundant, because the FSA was already doing what they proposed. For quite a lot of the time in Committee, we appeared to be told that the new regulatory regime was essentially going to be “Continuity FSA”, and that we could take it for granted that every good and acceptable thing that it was doing would carry on regardless. It was very much “Carry on FSA” throughout large parts of the debate in Committee.
	Like other hon. Members, I recognise the deficiencies in the Bill. As I stressed in Committee, it has significant holes in its provisions for compelling consumer interests, which the hon. Member for Nottingham East (Chris Leslie) touched on. The Government rejected key amendments to the provisions on consumer credit, and the related but very distinct issue of debt management, that would have given the Bill more meaning and relevance to people and offered them a bit more of a promise. Instead, the Government are merely saying, “We will attend to these things in future, and there is enough future-proofing in the Bill to allow us to amend it for all sorts of reasons and purposes.” They rejected, as they have again today, amendments that would have coloured in how those amending powers could be used—in particular, they rejected the amendments that would have indicated where the regulators were meant to reflect on certain matters and to advise on where regulation may need to change.
	The hon. Members for Nottingham East and for Chichester emphasised the importance of parliamentary oversight and reporting. The need for crisis provisions may not be far away in the current circumstances, and we require clarity about that. After the next crisis, when there is confusion about who is responsible and which bit of furniture is meant to support which particular aspect, people will not accept that hon. Members did not know about these issues, because we are the authors of this legislation. As the hon. Member for Chichester said, it is a pity that the Bill, instead of having its own full sweep of provisions, tends to rely on going in and out of various bits and pieces of all sorts of other legislation, which are bumping into each other and not connecting very well. It is a bit like that Johnny Cash song, “One Piece at a Time”.

Jim Shannon: Sing it!

Mark Durkan: No, I will absolutely resist the idea of singing it. The only people who ask me to sing are bouncers, because it helps them to clear the premises.
	Another deficiency relates to stewardship and the fiduciary duties of institutional investors and fund managers. Again, the Government assiduously resisted straightforward amendments in that respect. I cannot understand why they would refuse to have in a Bill principles that they say are reflected in common law. If this about consolidating legislation and making sure that there are no ambiguities in future, it would have made sense to include such provisions.
	There is another serious gap in relation to consolidated oversight, and I hope that the Lords will pick up on that. The Bill provides for consolidated oversight in relation to regulated authorities where the parent holding company is itself a financial institution and a regulated authority, but not where it is not. That gives rise to the
	whole question of the “Tescofication” of banking services. While the Bill provides that there can be changes in future, it does not specify where they might happen. The Government resisted amendments that would have coloured in the responsibility for considering where changes might be needed and, in particular, ensured that the new regulators did that.
	On a more regional level, there is particular interest in Northern Ireland about the progress of the Bill and its associated measures because of the change to the regulation of credit unions. I hope that the Minister is aware that there is still deep disappointment among those in the credit union movement in Northern Ireland about the impact of the new regulations, which will take them back from where they should be and diminish their existing capacity to make sound investment choices. They look forward to being able to offer more services. Although that will be possible under regulation by the FSA and, in future, the PFA, they are disappointed that the price for that, from the first day of the new regulatory system, is that they will be restricted in making the sensible, prudential investment decisions for their members that they have been making very successfully.

David Mowat: The Whips have asked me to be brief, and I will.
	The Chairman of the Treasury Committee, my hon. Friend the Member for Chichester (Mr Tyrie), listed eight issues. I am pleased to say that he did not get to the one that I wish to raise, which is the area in which the Bill could be improved. That is international regulation.
	The Bill is very strong on the national position. There are bail-ins, capital buffers and ring fences—the whole macro-prudential suite. In fact, there is a whiff of over-regulation in the ring fence. There is not such a whiff, however, in how we are going to deal with the international issues that confront us. If there is another crisis, it will not occur in a national bank, and I say that to whoever is in charge when the next crisis arrives.
	I was on the Joint Committee on the draft Bill and listened to the risk managers from Barclays Capital, Goldman Sachs and J. P. Morgan, and it struck me that their outlook was entirely global. They have global IT systems and global profit and loss accounts, and they manage risk and divvy up bonuses globally. To the extent that the national position matters to them at all, it is because they have to produce accounts, often three, four, five or six months later, so that they can pay taxes and satisfy statutory requirements.
	We must consider the issue of risk arbitrage, but what we need to do is not just about that. The regulatory structure must follow the structure of entities such as
	those that I mentioned. The Bill is national in its outlook, which was why I probed the hon. Member for Nottingham East (Chris Leslie) on his point about Europe. Perhaps it has to have such an outlook, but that leaves us a big issue to consider.
	It is instructive to consider the two big things that have gone wrong in the past year, while the Bill has been going through the House. They have been at MF Global and, more recently, J. P. Morgan. I do not believe that much of what is in the Bill would have had any effect on either situation. MF Global had a £40 billion balance sheet, and it would not have been regulated by the FPC. The case of J. P. Morgan is even more interesting. It lost £2 billion—in fact, yesterday it was suggested that it may have been £4 billion. Even if there were another nought on the end of that, I am not sure the situation would have been picked up under the Bill, but it would have started to get serious. That loss occurred in London, but only because that happened to be where J. P. Morgan put its risk management function. It could have been anywhere.
	When we design a regulatory structure, it has to mirror the organisation of the bodies that it is regulating, or it is just irrelevant. I am concerned that too much of what is in the Bill is irrelevant to where the risks will emerge in the next decade or two. I want to give three examples of potential problems. The first is one of co-ordination. We have heard the point about twin-peaks regulation versus sector-based structures. The situation is not brilliant, but there is a committee to fix it and we will do our best.
	The second potential problem is ambiguity. We talk about judgment-based regulation in the UK, whereas the Europeans talk about rule-based regulation. Those two methods will be regulating the same entities, and possibly the same departments of those entities. How will that be sorted out? Where ambiguity exists risk exists, because things always go wrong on the boundaries.
	The third potential problem is one of international risk management. In my judgment, there is nothing more important than how the college of regulators works.
	Four hours having elapsed since the commencement of proceedings on consideration, the debate was interrupted (Programme Order, 23  April ).
	The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the Bill be now read the Third time.
	Question agreed  to .
	Bill accordingly read the Third time and passed.

Civil Aviation Bill

Third  Reading

Theresa Villiers: I beg to move, That the Bill be now read the Third time.
	Throughout the consideration of the Bill, the debate has been informed and constructive. I thank all Members who have taken part, including Opposition Front Benchers such as the hon. Member for Poplar and Limehouse (Jim Fitzpatrick), the shadow aviation Minister. We have also been assisted by the excellent report prepared by the Select Committee on Transport. I reiterate the thanks that I have given to the Committee and its Chair for their work on pre-legislative scrutiny.
	The Bill has enjoyed considerable cross-party support at every stage in its passage through the House, and its key elements have been broadly welcomed by airports, airlines and a number of other stakeholders. That reflects the efforts made not just by this Government but by our predecessors in office to listen to the industry’s concerns and respond effectively to them to put together a balanced reform package.
	In the year of the London Olympics and the diamond jubilee, we are reminded once again of the crucial role that the aviation industry plays in bringing millions of tourists to this country. That is just one element of its wider contribution to the UK economy. The Bill will modernise the framework for the economic regulation of airports, greatly improve transparency and accountability and put the passenger interest right at the heart of the new regulatory system. There is widespread agreement that the current one-size-fits-all regulatory regime is inflexible and outdated. The system proposed in the Bill will deliver more effective protection for passengers and a lower regulatory cost for industry.
	At the heart of our proposals is a new primary duty to further the interests of passengers and freight owners. The Bill will also enable the Civil Aviation Authority to tailor measures to each individual airport, allowing it more flexibility to target intervention in the most proportionate way.
	With a strong emphasis on the price control process, the current rules leave the CAA with very limited options if problems occur between five-yearly reviews. The new licence system in the Bill will allow for real-time regulation, empowering the CAA to act swiftly if an airport is failing its customers on, for example, service quality, winter resilience, volcanic ash or any challenges that it is not yet possible to foresee.
	Clause 1(3) and (4) require the CAA to carry out its economic regulation functions in a transparent, accountable, proportionate and consistent way. To respond to points made in earlier debates, we are strengthening the scrutiny to which the CAA is subject by giving a new accounting direction to the regulator, requiring it to include an efficiency statement in its annual report, which will be subject to validation by its external auditors.
	The primary duty to passengers, which is so pivotal to the Bill, will provide greater certainty and clarity for airport operators, which in turn will encourage long-term investment in the improved facilities that passengers
	want. A shift to more independent economic regulation also removes risks associated with political interference, which is why it is a common feature of modern regulatory regimes.
	The Bill will also make the CAA’s decisions more accountable than they have ever been by introducing a new appeals process. The Government worked hard with both airlines and airports to come up with an appeals system that gives effective redress to airlines without turning the new regulatory regime into a two-tier system, which would have dragged the Competition Commission or the Competition Appeal Tribunal into everyday CAA decision making. The result of that work is that the Bill provides appeal rights to both airlines and airport operators that are significantly more effective than existing remedies. However, not just businesses benefit from greater transparency and clarity. The Government believe that providing the right information for consumers can sometimes achieve better results than traditional regulatory intervention, so the Bill will give the CAA new functions on collecting and publishing information on issues such as service quality to help consumers to make informed decisions on competing operators in the aviation sector.
	The Bill contains important security provisions—keeping people safe and secure when they travel is paramount. The Secretary of State is responsible for aviation security policy and for giving security directions. That will not change under the new approach we are advocating, but the Government believe that giving the experts in aviation operations a greater say in how security is delivered will improve our ability to guard against the very real threats we face.
	The CAA has valuable experience not just of regulation generally, but of safety management systems that ensure that risks are controlled as effectively and efficiently as possible. We believe that that track record on safety will assist the CAA in overseeing the delivery of the new security management systems, which are an important element of the move to an outcome-focused, risk-based approach to security, which has been debated extensively during the Bill’s passage through Parliament.
	I am also convinced that vesting those regulatory functions for security in the CAA will benefit the aviation industry, because it will henceforth be able to deal with a single regulatory body rather than the current two bodies. Moreover, we expect that the complementary measure—the introduction of an outcomes-focused, risk-based approach to security—will enable security checks to be integrated more closely into the general business of the airport. That should open the way to more cost-effective and more passenger-friendly ways of delivering security outcomes.
	Plans for the proposed move of responsibilities in relation to security regulation to the CAA are already being developed. The Department for Transport is in discussions with the Department’s staff who are likely to be affected and with their trade union representatives, because we are keen that as many employees as possible stay in post when their jobs transfer to the CAA, taking their skills and valuable experience with them.

Julie Hilling: The Minister said that the Department has had conversations with the staff and their representatives. Can she give us any more information about that, because—as she will be well
	aware—one of the concerns we raised during the passage of the Bill was about the loss of expertise if staff did not follow their jobs to the CAA?

Theresa Villiers: We are in discussions with both the CAA about the practicalities of the move and with those Department for Transport staff whose posts we expect to move. At the moment, we are not able to give them all the answers on all the issues, partly because the Bill has not passed as yet, but also because issues such as pensions are under review both in the civil service and in the context of the CAA. But we are very conscious of the need to try to provide as much visibility and information as possible, and we are working to do that, although it will take time to work through certain issues.
	On environmental matters, the Opposition tabled an amendment on Report—it was extensively debated—that would have imposed a supplementary environmental duty in relation to the CAA’s airport economic regulation functions. I understand the motivation for such an amendment, as I said on Report and in Committee, but I believe that its aim is already provided for in the Bill, which already allows the CAA to approve reasonable investment in measures that mitigate environmental impact. No doubt the discussion on whether further clarification on that point is needed on the face of the Bill will continue in the other place in the same constructive and thoughtful way that it has in this House.
	I must emphasise, however, that the Bill already includes important new information provisions to help us address the environmental impact of aviation. The Bill gives the CAA powers to collect and publish information about the environmental effects of civil aviation. Not only could that be used to give more information to communities affected by aircraft noise—hon. Members know how significant an issue that is for many people—but it will ensure that passengers have better information about the environmental impact of their travel choices than is currently available. We believe that improving transparency will help us to harness consumer power in pushing for progress towards cleaner and quieter planes.
	Some have called for more on the environment to be included in the Bill, but to be effective, environmental measures need to be applied proportionately across the whole sector and not just focused on those airports that happen to be subject to economic regulation. So separately from our efforts contained in the Bill to reform economic regulation, a number of initiatives are under way to deliver cross-sectoral action on the environmental impact of aviation. Adding aviation to the European emissions trading system is expected to deliver carbon savings across Europe of some 480 million tonnes in the period to 2020. Both NATS and the CAA have a strong focus on reducing fuel burn and addressing noise in their work on improving airspace management, and the Government will soon publish a consultation on a sustainable framework for aviation. We are clear that aviation should be able to grow, but it must also play its part in delivering our environmental goals and protecting the quality of life of local communities affected by aircraft noise and other local impacts.

Julie Hilling: The Minister said that the consultation document will be published “soon”. During the passage of the Bill, we have talked about future legislation that would enable environmental concerns to be addressed, so can she tell me what “soon” means in this context?

Theresa Villiers: We will publish the consultation in the summer alongside a call for evidence on maintaining the UK’s hub capacity.
	Last, but definitely not least, the Bill will grant the Government the power to extend ATOL protection to flight-inclusive holidays sold by airlines and those sold on an agent for the consumer basis. Extending the ATOL scheme has received strong support in the House and has the long-term support of the Transport Committee. If the Bill is adopted, we would expect to consult next year on whether the new powers should be exercised.
	In conclusion, by establishing a single, clear, primary duty to passengers as the overriding principle of economic regulation, the Bill will incentivise investment in our airports by providing greater clarity and certainty for airport operators and investors; put passengers’ interests at the forefront of the regulatory regime; give the CAA far more effective powers to intervene swiftly if an airport fails its customers; and open the way for a further extension of the ATOL scheme, which for nearly 40 years has provided financial protection and peace of mind for millions of holidaymakers. I urge the House to support the Bill.

Jim Fitzpatrick: I begin by thanking all my colleagues who sat on the Bill Committee for their support, assistance and advice, as well as those who helped on Report, outside stakeholders who sent submissions and/or gave evidence and the Transport Committee for its scrutiny of the Bill.
	We welcome and support the Bill. On Second Reading, my hon. Friend the Member for Garston and Halewood (Maria Eagle) said that we would support the Bill. That was no surprise. Much of it was drafted when we were in government, so there was a legacy. However, the timing of its arrival was a bit of a surprise, so the Transport Committee scrutiny was a little dislocated. Indeed, the Government’s response to the Select Committee was published only last Friday. It is good that it is out, but it demonstrates that there were surprises in the timing.
	Not only was the arrival and timing a surprise but the inclusion of the security clauses, which were not in the original Bill, was not expected. Also, importantly from our point of view, the environmental protection measures, which were in the original draft Bill and mentioned in the Department for Transport press releases announcing the publication of the Bill, surprisingly did not appear in the Bill. That was a disappointment to the Opposition, and I shall return to it.
	I do not want to appear too critical, however, although it might come across that way in due course, because, as I said, we support the Bill. In Committee, the Minister was as courteous as usual, although she and the Government did not accept a single amendment—she did so quite politely—even when she was injured and might have been a bit more vulnerable. The fact that Ministers did not accept any amendments was a matter of considerable disappointment to us, particularly given that we had the support of many stakeholders and recommendations from the Transport Committee.
	The Minister has well covered two of the obviously key elements of the Bill—putting the passenger at the core of the CAA and updating the industry’s economic regulation. However, a number of other issues were
	raised in Committee, highlighting the strengths and weaknesses of the Bill, and I wish briefly to refer to some of them. We had a good discussion on security and the outcomes-focused, risk-based system. We support those arrangements, but, as my hon. Friend the Member for Bolton West (Julie Hilling) said, we were concerned about the arrangements for staff transfers and the certainty of their entitlements on wages, conditions, pensions and redundancy agreements. The staff side raised concerns that members of staff might be worried and often not accept or apply for transfers. The potential haemorrhaging of staff in such a sensitive area was of concern to the whole Committee, so it was good to hear the Minister provide additional reassurances before and after my hon. Friend’s intervention.
	The Minister mentioned the ATOL reforms, which we all support, despite the delays. We will do what we can to help the Secretary of State and the Minister of State introduce and enact the reforms, because that is what we all want. Recent pronouncements have perhaps pointed towards more complications arising, which is obviously frustrating not only to the Department and the Government, but to all concerned.
	Let me turn to the opportunities that were missed. On the environment, we proposed a duty, as the Minister mentioned. We also suggested including environmental aspects in the licensing conditions for Heathrow, which we think would be reflected right across the industry. On the passenger experience, we proposed that the responsibility for producing welfare plans should be a matter for the licensing arrangements for Heathrow, given the experiences in recent years of passengers being stranded, with all the difficulties that we have seen, heard about and, in some instances, experienced. It is interesting that the indicative licence produced for the Civil Aviation Authority suggested that the licence that it will produce for Heathrow ought to contain passenger welfare elements. We think that the Government could have given a firmer steer by referring to that in the Bill, which would have helped. We also made various suggestions about the efficiency and scrutiny of the Civil Aviation Authority, although I will return to those presently.
	There are two additional areas that the other place will want to take account of: one was mentioned in Committee, whereas the other was not. The first is the honesty and accuracy of ticket prices, particularly from the bucket airlines, and the hidden surcharges. The CAA could clearly play a role in addressing that, and I am sure that the issue will be raised in the other place. The other issue, raised most recently, is the suggestion that certain passengers should be able to fast-track themselves through security and immigration for a price, which has caused quite a bit of consternation among passengers generally. Given that the suggestion has been made since Report, I suspect that the other place will want to see how things could be obviated to ensure fairness for everybody going through our airports.
	Let me look briefly at the three areas I have mentioned. On the environment, we had a bit of banter with the Government about their mantra, which we hear all too frequently, of wanting to be the greenest Government ever. We obviously had quite a bit of disagreement about whether the Bill reinforces that claim. Indeed, the Minister for shipping, who is in his place, and I had a
	discussion this afternoon about this being the greenest Government ever in terms of environmental protection. However, I do not think that Mr Deputy Speaker—
	[
	Interruption
	]
	—if he was paying attention—will let me go there. [Hon. Members: “Ooh!”] My apologies, Mr Deputy Speaker: I wanted to ensure that you did not allow me to stray, because, seeing the hon. Gentleman in his place, I could easily have gone down that cul-de-sac.
	On reporting and giving information to passengers, clauses 83 and 84, which we covered extensively, are welcome. However, we thought that there ought to be a duty on the Civil Aviation Authority, as there is on every other economic regulator, to take account of the environment. Reading between the lines, I am not sure whether the Minister’s comment that she expects the matter to be raised in the other place was perhaps an indication of more openness from the Government or that they might be prepared to look at this again.
	One element of licensing to do with the environment that was raised by a number of my hon. Friends concerns protection for neighbourhoods, planning permissions and the rest of it. We think that including that in the licence would give communities greater strength and the certainty that airports and the aviation industry would take account of the sensitivities mentioned by the Minister of State.
	The last thing we suggested—which the Government did not think it was appropriate to pick up—was the requirement for ticketing to show the environmental impacts of different modes of travel, thereby helping passengers to make decisions based in part, perhaps, on the difference between the environmental impact of going by air and the impact of travelling by rail or coach. I will be surprised if that suggestion is not examined further in the other place.
	On the passenger experience, the reporting, information gathering and publishing will, again, be welcomed. However, as I have said, we think that the welfare plans should have been included in the licence, and that represents a missed opportunity by the Government.

Theresa Villiers: I feel that I ought to reiterate the reassurance I gave in Committee and on Report. We, too, are very supportive of a focus on passenger welfare plans. We just do not believe that the content of the licence should be hard-coded in legislation. We believe that the best approach is to give the independent, expert regulator the responsibility to decide what licence conditions are appropriate.

Jim Fitzpatrick: I fully accept that; we have a disagreement over whether this ought to be in the licence. We think that putting this in the Bill would strengthen the requirement and give a much clearer indication to the regulator that the Government expected it to look at this as a key area, particularly given the experience in recent years. We are talking about a difference in emphasis, rather than a difference in principle, because we all want passengers to be better protected against the vagaries of the weather or other factors detrimentally affecting them.
	Labour Members raised the whole question of the information on queuing times, and not just in baggage-handling areas. The key area where we disagreed was on whether immigration queues could or should be counted and measured, with information given to the public.
	Obviously, the Government’s position is that immigration and the immigration service, the UK Border Agency and the UK Border Force are the responsibility of the Home Office, and therefore it is not appropriate to deal with them in this Bill. However, given the further recent confusion over what the queuing time actually is, particularly at Heathrow, and given the disagreements on measuring between the airports and the immigration service, we think that the CAA could have played a very constructive role in that area, authoritatively collating the evidence and publishing it. As with a number of the other amendments that we failed with, I am sure that the Lords will wish to return to that.
	On CAA efficiency and National Audit Office scrutiny, we again agree to differ, but at least the Minister did come up with a proposal to strengthen the scrutiny, which, in some way, addressed the concerns we were raising. Obviously, we will monitor how the proposal works in effect. We hope that it will give greater reassurance to the airlines and other customers that the CAA will operate as we would all wish.
	In conclusion, this was a good Bill in draft and, in essence, it remains a good Bill, but there is still much room for it to be even better. We hope that the other place will be able to make the improvements that we were, sadly, unable to make.

Henry Smith: It was a pleasure to speak on Second Reading and an honour to serve on the Public Bill Committee earlier this year. As I said on those occasions, and it is worth repeating now, the airport and airline industry has changed significantly in the more than a quarter of a century since this area of legislation was significantly addressed. Since the British Airports Authority—latterly known as BAA—was privatised in 1986, London’s largest airports, Heathrow, Gatwick and Stansted, have been subject to the same economic regulatory regime designed to ensure that they did not abuse their monopoly position. The prices that Gatwick airport, which you will know is in my constituency, Mr Deputy Speaker, charges airport passengers are currently capped by the CAA, which sets them in accordance with Competition Commission recommendations. The revenues from those prices often appear listed on passenger tickets simply as “airport charges”, but of course they are used to pay for things such as runways, airfield facilities, terminal security, baggage systems and future development. Price caps are normally reviewed every five years. The Bill rightly reforms this process.
	Gatwick airport supports the Bill’s key principles, which herald a more flexible regulatory system that better reflects the way in which today’s aviation sector operates. Nevertheless, Ministers should recognise the relationship between the economic regulation of London’s airports and the Government’s priority of attracting new direct routes to emerging economies, which will help to grow the UK economy. My right hon. Friend the Prime Minister recently acknowledged that, under new ownership, Gatwick is emerging as a business airport, competing with Heathrow. Indeed, the airport’s operators have established new routes to countries such as China, Vietnam, South Korea and Hong Kong. Such progress shows that Gatwick can compete to provide direct links to those emerging economies, fulfilling the ambition it has of being a gateway to Asia.

Graham Stringer: My point probably applies more to Heathrow than it does to Gatwick, which is obviously the hon. Gentleman’s main interest, but does he agree that the decision of COMAC—the Commercial Aircraft Corporation of China—to locate in Paris rather than in London, mainly for airport capacity reasons, shows that the Government’s aviation policy has failed because it is essentially an anti-aviation and anti-business policy?

Henry Smith: I would not accept that the Government’s aviation policy is either anti-aviation or anti-growth, as shown by the fact that we are now on Third Reading of a Bill that will produce greater flexibility in this sector—vital for a trading nation such as ourselves. I believe the Government should be congratulated by hon. Members on both sides of the House on that achievement.
	Returning to my principal interest of Gatwick airport—I am the local Member of Parliament—I believe that it can grow by a further 11 million through-passengers than the current market share shows. The airport’s overall market share is only about a quarter of the total. Gatwick is not a monopoly, so it does not need to be economically regulated. The market should be allowed to work. Deregulation would allow Gatwick the flexibility to invest with pace in new infrastructure to accommodate developments such as the new A380 aircraft and undertake much-needed investment in areas such as the border zone. Through deregulation, Gatwick can emerge fully in line with the views expressed by my right hon. Friend the Prime Minister as an airport that can fairly compete with Heathrow and others. As an economically regulated airport, Gatwick cannot invest flexibly or price services according to what individual customers want or what the market will support.
	The Bill outlines a series of tests that must be met for an airport to be regulated. These aim to determine whether an airport has substantial market power and, if so, whether there is a risk of abuse of that position, which existing competition law is insufficient to control. An airport that meets the market power test requires from the CAA a licence to operate, which may include a price cap on what can be charged to carry passengers.
	With Gatwick being sold by BAA two and a half years ago and now separately owned and operated, I very much agree with the Transport Select Committee’s findings:
	“Given the greater degree of competition that now exists between airports in the south east of England…the CAA should undertake its economic regulatory duties with a relatively light touch.”
	Several members of the Public Bill Committee expressed a similar view. On Report, my hon. Friend the Member for Rochester and Strood (Mark Reckless) said, correctly in my opinion:
	“If Gatwick feels that it should invest significant sums of money in better terminal facilities in order to service the A380s and…allow the sorts of routes to high-growth markets in Asia that we so strongly support, I see no strong reason why it should be prevented from doing so and charging what the market will bear. I believe that that could be to the benefit of the consumer.”—[Official Report, 25 April 2012; Vol. 543, c. 1031.]
	Similarly, in Committee my hon. Friend the Member for Amber Valley (Nigel Mills), whom I am pleased to see in the Chamber, noted that the CAA started
	“from a position that… airports are regulated, and appears to want to keep them that way…. we should regulate airports only
	where there is a definite need to do so, and where there is a real advantage to the user, rather than looking to regulate unless we can find a way out of it.”
	––
	[
	Official Report, Civil Aviation Public Bill Committee, 
	28 February 2012; c. 153.]
	There is clear evidence that Gatwick is now competing with other London area airports. Airlines and passengers are moving between those competing airports in the south-east, and airlines are choosing Gatwick in preference to other airports to establish brand-new routes to countries that are key trading partners. Any legal test should reflect those trends, and there should be no risk of presumption towards regulation.
	The correct threshold for economic regulation of any company, including an airport, involves the application of the legal concept of dominance, which is well established in both European Union and United Kingdom competition law. It is used, for example, to determine whether telecom network operators should be subject to economic regulation in all EU member countries. Any test for market power should also be one of dominance. That would ensure a consistent approach to assessing whether there is a need to regulate in line with the regulation of other industries.
	I welcome this updating of legislation for the air industry. I believe that it gives us an opportunity to enhance our gift as an innovative aviation and trading nation, and to grow the economic prosperity and employment that we need.

Louise Ellman: I am pleased to be able to speak in the debate because this is an important Bill that reflects the significance of aviation to our economy. I am glad that there is so much agreement on the essentials, and I am pleased that the Select Committee on Transport was able to consider aspects of the Bill not once but twice, given some rather curious timing which my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) described as “dislocated”. I have not heard that word used before in connection with consideration of a Bill, but perhaps it is indeed relevant.
	We conducted pre-legislative scrutiny, but the parliamentary debate on the Bill began within about two days of the publication of our report. We then considered separately the proposals for reform of ATOL holiday insurance, when we had fuller information about the Government’s plans. In both our inquiries we generally supported the Bill, but we sought a number of changes and made a number of criticisms, some but not all of which have been taken up. I want now to refer to some of the concerns that we raised, which have been reflected in other parts of the debate on the Bill.
	The Bill’s focus on passenger experience and welfare is greatly welcomed, but it is important for that work to be conducted efficiently and effectively, particularly when it comes to the production of information about different experiences in different airports. When we were considering the Bill, concerns were expressed by a number of airports—especially regional airports—which were suffering as a consequence of the current economic hardships, and were worried about the increased cost that could result from the new regulation for which the Bill provides. It is important for the light-touch regulation to be effective,
	producing correct and appropriate information that can benefit passengers by enabling them to decide how they wish to travel.
	How to deal with adverse weather conditions has exercised the House for a long time. Although the Bill does address the issue, we were disappointed to note that its proposals were not strong enough to ensure that all airports would draw up proper plans to deal with bad weather. We were told that the CAA would deal with the matter, but, although we are glad that it has been highlighted to a greater extent, we still feel that sufficient emphasis has not been placed on it in all instances.
	Our greatest concern, which has been vindicated by events since the publication of our report, was the need for much more effective co-ordination and working together by the Department for Transport and the Home Office. Our report addressed immigration queues—and, indeed, if we are interested in questions of passenger experience, we should note that among travellers’ greatest concerns are baggage handling and queues at immigration. However, such queues are controlled by the Home Office through the UK Border Agency. We expressed concerns about a lack of co-operation, and subsequent events have reinforced that point. It is unclear how much co-ordination there is between the Department for Transport and the Home Office on how to deal with queues such as those at immigration and passport control. I hope that will be addressed once the Bill is enacted.
	Security is a linked area of concern. There has been a change in aviation security policy—a move to an outcome-focused, risk-based approach—and a split in responsibility for security between the Department for Transport and the Civil Aviation Authority acting on behalf of the airports. There is concern about how that division of responsibilities will operate while ensuring we maintain the highest standards of security in the most cost-effective manner. More thought needs to be given to how that is to be achieved. We also raised concerns about staffing and the initial proposals to move staffing from the Department to the CAA. We wondered whether expertise would be lost. The Department has addressed that in its response to our report, but concerns remain.
	Holiday insurance and ATOL reform are long-standing issues. The Committee has looked at that for many years, both in the previous Parliament and this one. The ATOL scheme was introduced in the 1970s. At that time it fitted the way most people went on holiday, which was on conventional package holidays. The situation has changed dramatically, however. Before the changes that came into force a few weeks ago, only about 50% of people going on holiday were covered by ATOL, and there was a £42 million deficit in the scheme. We support the Government’s proposed changes, such as the extension of what constitutes a package holiday—or, rather, a qualifying holiday—the introduction of flight-plus and requiring tour companies and transport operators to provide a certificate where ATOL is in force, giving clearer information to the traveller about what is covered by the insurance.
	I understand that about 60% of travellers will be covered under the new scheme, but I urge the Minister to use the powers under the Bill to extend ATOL further to incorporate holidays sold by airlines. Other tourism companies and operators feel a deep sense of grievance that while they have to pay the levies associated
	with ATOL, when airlines sell holidays they do not have to do so and do not face the same costs. I hope that will be dealt with, along with companies designated as agents for the consumer also being able to avoid some of the liabilities that other holiday companies have to take up. Although we welcome these changes, a much broader look at how the scheme operates is needed.
	We also think there is a need for more information on what the consumers—the travellers—actually want. There is little information about the views of travellers. They might, for instance, want more information on other forms of available insurance. Although I repeat that we certainly welcome the Government’s measures, they need to go further.
	More work can be done on all those points of concern, although I reiterate that there is general support for the Bill. I view the items of concern I have mentioned as works in progress and I hope that the Minister can assure us that she sees them in that light too. I hope that she can give us an absolute commitment that there will be closer working between the Department and the Home Office on the queues at our airports so that that problem, at least, can be dealt with satisfactorily as soon as possible.

Julian Huppert: I welcome the Bill. For too long, regulation across Government has been too centralised in Whitehall and has not focused on its core consideration, which is the needs of the public. The general duty to passengers in the Bill is an excellent step forward.
	For far too many decades, we have seen top-down central control of transport policy. Even if all we had was a general duty for passengers the Bill would be good, but it has more to it, as has been outlined by the Minister, such as the ATOL reforms. Under clauses 83 and 84, extra information must be provided for passengers so that they know what is going on, whether it is about transport options for getting to the airport or the environmental impact. It lets passengers know and lets them decide what they want. I particularly welcome the environmental information required under clause 84.
	It is clear that we must tackle the growing environmental impact of aviation. Even if we simply stick with the framework set by the Committee on Climate Change back in 2009, by 2050 aviation is due to make up at least 25% of our allowed carbon emissions. Its relevance to the future of our planet is hard to quantify but also hard to overestimate. Aviation already has a huge impact on people’s daily lives. Hundreds of thousands of people live under the Heathrow flight path—indeed, a quarter of all people in Europe who are affected by aircraft noise pollution are under the Heathrow flight path.
	I have made it clear throughout the progress of the Bill that I want an enhanced environmental duty and a strengthening of the Bill in that regard. I have been talking to the Minister about that point, as we have not yet reached a solution that works. I am optimistic that the Minister will be able to work out the exact wording before the Bill reaches the other place, but we are not there yet.

Jim Fitzpatrick: rose —

Julian Huppert: I was about to be nice about the shadow Minister, but I shall let him speak first.

Jim Fitzpatrick: In that case, my timing is appalling. It might have been the first time that the hon. Gentleman had been nice to me—[Hon. Members: “Aah!”] I am not getting this right at all tonight, Mr Speaker. I apologise for that.
	In Committee, the hon. Gentleman and I had a very difficult exchange. He rightly said that our first amendment on the environment did not have the quite the right focus or the right wording, was not strong enough and did not mention the Climate Change Committee. We took his advice, changed all those points and tabled an amendment on Report that covered all those elements, but he still could not vote for it. Will he give us some indication whether he will be more successful with the Minister this time than we were last time?

Julian Huppert: I thank the shadow Minister for his praise and I am glad that he listened to my comments about the first version of the amendment. I was about to say that I welcomed its intentions and was very pleased that it was improved. I think that it is almost at a stage where it could be accepted. Unfortunately, it was not quite there.
	I was wondering whether to use some of the criticisms that I had stored up, and I shall use one. One thing that concerns me about the shadow Minister’s position is his party’s overall position on the environment. The new shadow Environment Minister whose post was announced in the recent reshuffle—the hon. Member for Glasgow South (Mr Harris)—said on Second Reading that he hoped his party would support the third runway at Heathrow and argued that concern for the environment was really a form of class warfare, saying that we were coming up with environmental concerns because people with less money were able to fly. I am sure that that is not what the shadow Transport Minister, the hon. Member for Poplar and Limehouse (Jim Fitzpatrick), means and I hope that he will be successful in persuading his colleagues to take a more sensible approach.

Peter Bone: I refer the House to my entry in the Register of Members’ Financial Interests. Is the hon. Gentleman arguing for an additional runway at Heathrow? The impact of flying to Heathrow and flying around until the plane can land—stacking—must be environmentally wrong. He is right to argue for an additional runway.

Julian Huppert: I do not think anyone here believes I am arguing for a third runway at Heathrow. If the hon. Gentleman has misunderstood that, I am sorry. This highlights the problem that there are people on the Back Benches on the Government side who are in favour of a third runway at Heathrow. I wish Ministers good luck in persuading them. Unfortunately, it seems that Back Benchers and Front Benchers on the Opposition side hold such views, although I realise that is not the shadow Minister’s official position.
	I hope we will be able to get the outcome that we all want, party political bickering aside, and that the Minister and the Secretary of State will be able to deliver that in the other place. One concern that has been raised is that the current proposals will tackle only regulated airports.
	I would like them to go wider than that. For example, the Aviation Environment Federation suggested amending section 4 of the Civil Aviation Act 1982. That would be a more general approach and would not hit just particular areas, so that is one possibility. This is a good Bill. It could be tweaked to be even better, but it should be greatly welcomed on both sides of the House. It will give us a sustainable future for civil aviation in this country, with open data, proper regulation, support for sustainable transport and proper passenger-led reforms. I am delighted to support it.

Gavin Shuker: I am extremely grateful for this opportunity to speak. It is particularly expedient that I should do so after the hon. Member for Cambridge (Dr Huppert), for reasons that I shall come to. First, let me address one of the issues at the heart of the Bill: passenger experience. We welcome the Bill, which we sought to amend and improve in Committee. I was proud to serve on the Committee with colleagues from the Opposition Benches, some of whom are present. When things go wrong for someone at an airport their first instinct is to blame the airline, but it is rarely the airline that is at fault. We have seen such experiences at several airports and some bubbling discontentment, particularly more recently as a result of immigration and other issues such as poor weather. That is why we sought to put welfare plans for passengers into the Bill and why we sought to help disabled passengers more explicitly by putting such measures in the licence conditions. The two Front-Bench teams have explained their differences on where the emphasis should be.
	For me, the key issue is about holding airport operators to account. I served on the Select Committee on Transport, and I remember seeing the chief executive of BAA come before the Committee shortly after the December 2010 snow disruption and confess that, of the 80 different measures of Heathrow’s success that were taken in December 2010, only three or four had been breached and marked as red, whereas every other box had been ticked green. In a sense, that underlines why we need to be really explicit about what we want to measure. I am sure that the CAA will be good at that, although the Opposition would have preferred the Government to have a more active role at the legislation stage.
	The second issue I want to address is environmental responsibilities. In Committee, we felt it would be extremely helpful and effective if the CAA had a clear duty on the environment, and at one stage it appeared that the Department for Transport believed that too. Certainly, as the Bill came through, we saw from its drafting that that would not be included. I am talking about giving environmental information to passengers so that they can make smarter choices and about making sure that the CAA, as an economic regulator, can do its job, balancing the needs of the economy alongside the needs of the environment.
	I wanted to speak to this Bill not just because I represent an airport constituency—Luton airport, which many people will know and love—but because I am deeply concerned about growth. We know that there is limited growth in the economy, to put it mildly, and that we need a long-term strategy for growth. As the Minister
	has pointed out, if aviation is one of the routes for that growth, it is important to have continuity and consistency in the Government’s approach. That is why I am so concerned about the remarks that we heard in Committee, which the hon. Member for Cambridge spoke about.
	A Liberal Democrat member of the Committee whom I shall not name—okay, I will, it was the hon. Member for Cambridge—said in Committee:
	“I would very much like to see an environmental duty in the Bill. That is an important issue, and I raised it on Second Reading.”
	He went on:
	“I am confident that she”—
	the Minister of State—
	“will…find a way to deliver an environmental duty in this Bill…It is not a trivial issue.”––[Official Report, Civil Aviation Public Bill Committee, 28 February 2012; c. 116-17.]
	We wait to see whether the Minister is willing to give to her coalition colleague that assurance. We certainly felt that the point might have been more easily pressed home had the hon. Gentleman voted for it in the first place. I say that not to embarrass any particular Member on the Government side—honestly—but because I think the issue goes to the heart of aviation strategy more broadly under this Government. As with many issues under the coalition Government, we have one party on the accelerator and one party on the brake. Sometimes those flip around, but on aviation strategy the nature of the coalition becomes even more disparate. We have two people on the accelerator and one on the brake, or one on the accelerator and two on the brake at different times. There is no clarity for the industry about where this Government want to take aviation. That should be a big concern for us.
	We know the issues in aviation; the big one that needs to be tackled is the requirement for greater capacity in the south-east. With reference to Luton airport, we know that the Minister is deeply interested in point to point and she is right. We should make more effective use of the capacity that we have. I hope the ministerial team will bring forward commitments on that in the coming months. We can go from 8 million passengers to a greater number without doing significant ground works or extending the runway.
	We need resolution on whether there will be a genuine hub airport—one that does not fall over when it snows, when it rains, when there are small amounts of disruption. While that issue remains unresolved, perhaps because of the nature of coalition government, perhaps because of geographic requirements on Ministers or individual MPs, simply saying no is not a policy.

Graham Stringer: I wish Luton airport well; I have used it on a number of occasions. However, the recent report from BAA shows that if we do not have a third runway at Heathrow, which is the only solution to providing a hub airport, we will lose £100 billion in the economy. That is a non-trivial amount. Not having a third runway, as the hon. Member for Wellingborough (Mr Bone) said, is actually bad for the environment.

Gavin Shuker: I thank my hon. Friend. I want to make it clear that I think the right approach is to reach a cross-party consensus on the future for a hub airport. In that context, the moves by the shadow Secretary of
	State and the shadow Minister of State to write to Ministers at the Department for Transport saying, “We will take the option of a third runway off the table,” acknowledging that it has been taken off the table by Ministers, is the right way to go. However, the issue does not go away. In the course of developing policy in both major parties, we cannot continue to dodge the bullet. We need a hub airport that is fit for purpose. That is why I believe it is so important, given the passage of the Bill through the House tonight, that we find a way to tackle the big issues in aviation.

Greg Knight: Does the hon. Gentleman agree that more people who wish to travel to and from London could and should use Luton airport?

Gavin Shuker: Sometimes one is bowled a googly in the House. I am not sure whether I have been with that question. I agree absolutely with the right hon. Gentleman. More people could use the four or five other airports around London instead of Heathrow and use existing capacity well.
	I believe that the Minister’s heart is in the right place on the issue. We should speak positively and give a clear direction for industry, because without that the Department will not make its vital contribution, which we need for growth.

Jim Shannon: I congratulate the Minister and the Government on bringing the Bill to the House on Third Reading, and the Opposition on the hard work that they did in laying the foundations for legislative change when they were in power. It should be recognised that the Opposition have done a lot of work on the matter.
	The thrust of the Bill is to reform the economic regulation of airports, with particular focus on those airports with market dominance. We are talking about Heathrow, Gatwick and Stansted. As a Northern Ireland MP travelling every week, I have become very familiar with Heathrow and Gatwick. Since the British Airports Authority was privatised in 1986, London’s largest airports, Heathrow, Gatwick and Stansted, have been subject to the same economic regulatory regime, which was designed to ensure that these major airports did not abuse their monopoly position.
	The prices that Gatwick charges airport passengers are currently capped by the Civil Aviation Authority, which sets them in accordance with a Competition Commission recommendation. The revenues from these prices often appear on passengers’ tickets as airport charges. They are used to pay for runways, airfield facilities, terminals, security, baggage systems and future development. Price caps are usually reviewed every five years, but the Bill reforms that process.
	As a Northern Ireland MP, I would ask for some clarification on a number of issues. The Bill has some consequences for all Northern Ireland airports, which I will briefly touch on. The Government are rightly always looking to consult the public, but sometimes the cost is astronomical. Airports have expressed concern to me that the CAA is running a consultation that may lead to a significant increase in the charge it levies on airports, so a cost element comes into the CAA process, which it is important to take into consideration.
	In addition, there is the proposal to transfer some of the aviation security oversight functions from the Department for Transport to the CAA, which in turn will directly charge airports for those services, which is not currently the case. As the Bill contains no provision for the airport operator to pass the charges directly to users, that will mean an increase in cost that the operator has to absorb, and those costs are extreme. At Belfast International airport, it is likely to be in the region of £100,000 to £120,000 annually. Obviously, that is unwelcome, because it eats into the capability to reinvest in infrastructure, yet the Government’s first objective was to encourage reinvestment in the airports. There are perhaps unintended consequences, but they are significant when we take into account the fact that the annual CAA licence, which is based on passenger numbers alone, presently costs the likes of Belfast International airport £202,000 a year, which is a 50% increase on top of what it already pays. That is very concerning. Who can absorb such colossal sums of money annually?
	It has also been pointed out to me by officials from Belfast International airport that we must recognise the relationship between the economic regulation of London’s airports and the Government’s priority of attracting new, direct routes to emerging economies that will help the UK economy to grow. The Bill is about regulating, but it is also and should be about encouraging growth in our airports to encourage growth in our businesses and tourism, and the Bill has a part to play in that. We in Northern Ireland want a balance between regulation, growth and opportunity for our airports, Belfast International, Belfast City and Londonderry.
	The hon. Member for Crawley (Henry Smith) also referred to that in relation to Gatwick, and he outlined the issue of regulation. Gatwick wants the regulation system to reflect the way in which the aviation sector operates. Gatwick is clearly emerging as a business airport, competing with Heathrow, and it has space available—another issue that has emerged. In determining whether an airport should be regulated, the CAA must find that an airport is dominant, as interpreted in competition law by the European Commission and referred to in the CAA’s own competition assessment guidelines, and Ministers should provide clarification on that matter.
	The CAA has said that it fully expects more than 50% of all decisions to be appealed under the new system. That suggests that the present system is not perfect, and that changes should be made sooner rather than later. Will the Minister clarify how the Government have assessed the financial and business impact that the new appeals system will have, and whether they will consider additional safeguards to reduce the burden that it will place on regulated airports, such as a narrower right of appeal?
	The Transport Committee recommended that the information publication requirements should not create disproportionate burdens for the aviation sector, and that is another issue of concern. Gatwick is now competing with other London airports. There is clear evidence of that, with airlines and passengers moving among competing London airports and Gatwick, and airlines choosing Gatwick over others to establish brand new routes to key trading partners. There should be no risk of presumption towards regulation.
	I will conclude with a final comment on the CAA. It has been indicated to me that the CAA is unable to deliver slots for Heathrow airport. Indeed, it has been identified that the European Union needs to amend regulations in order to enable flight slots for regions, for example for Belfast International airport and Belfast City airport. Can the Minister confirm that the Government have no power as a result of EU regulations to retain or safeguard routes between Belfast and Heathrow? I understand that if she is unable to confirm that, amendments to the Bill will be tabled in the other place. I look forward to the Minister’s response to those questions.
	Question put and agreed  to .
	Bill accordingly read the Third time and passed.

Business without Debate

DELEGATED LEGISLATION

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Climate Change

That the draft CRC Energy Efficiency Scheme (Allocation of Allowances for Payment) Regulations 2012, which were laid before this House on 26 March, in the previous Session of Parliament, be approved.—(Jeremy Wright.)
	Question agreed to.
	Motion made, and Question put forthwith (Standing Order No. 118(6)),

Dangerous Drugs

That the Misuse of Drugs Act 1971 (Temporary Class Drug) Order 2012 (S.I., 2012, No. 980), dated 29 March 2012, a copy of which was laid before this House on 3 April, in the previous Session of Parliament, be approved.—(Jeremy Wright.)
	Question agreed to.

PETITIONS

VAT on Static Caravans

Nigel Evans: I advise the House that time is crucial and I would like to explain how we plan to do this. There are a large number of petitions to be presented and I hope that it will be of assistance to the House if I set out how we shall proceed.
	Once the first petition relating to VAT on static caravans has been read to the House, with its prayer, subsequent petitions on the same topic should not be read out in full. Members should give a brief description of the number and location of the petitioners and state that the petition is “in the same terms”. Members presenting more than one petition should present them together.
	When a Member has presented a petition, she or he should proceed to the Table and hand it to the Clerk, who will read its title and then hand it back to the Member. She or he should then proceed directly to the
	petitions bag at the back of the Chair. I will call the next Member immediately after the Clerk has read the title. At the expiry of half an hour, no further petitions may be presented orally, but they may be placed in the petitions bag and will be recorded as formally presented. Is everybody happy? I call Mr Graham Stuart to present his petition.

Graham Stuart: Normally at this time of night the House is emptying, not filling up. Instead, colleagues are coming into the Chamber because of their concern about the imposition of VAT on static caravans. If enacted, the Government’s proposal to impose VAT on static caravans will cost jobs. Only today, Willerby Holiday Homes, Britain’s largest caravan manufacturer, announced plans for 350 redundancies in anticipation of the tax rise. Jobs will be lost not only in manufacturing and the supply chain, but in the parks themselves, which employ 26,000 people directly across the country. I am grateful to Mr Speaker for allowing us half an hour this evening to present these petitions on behalf of so many constituencies across the country. Although I will read out the full text, Mr Deputy Speaker, you have asked that others do not do so.
	In addition to presenting a petition on behalf of those in Beverley and Holderness, I am presenting petitions from the constituencies of: Birmingham, Northfield; Blackpool South; Blyth Valley; Bognor Regis and Littlehampton; Bridgwater and West Somerset; Carlisle; Christchurch; Clacton-on-Sea; Dwyfor Meirionnydd—I hope there are no more Welsh constituencies to trouble me; Eastleigh; Filton and Bradley Stoke; Forest Heath; Harwich and North Essex; Islwyn; Milton Keynes South; Montgomeryshire—I am confident about pronouncing that one; New Forest West; North Devon; North Norfolk; Poole; Rochdale; Selby and Ainsty—I am delighted to see my hon. Friend the hon. Member for Selby and Ainsty (Nigel Adams) in his seat and supporting this presentation; Shrewsbury and Atcham—I am also delighted to see my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) in his seat; South Dorset; South Down; Stirling; Tynemouth; Wells—I am delighted to see the hon. Member for Wells (Tessa Munt) in her seat; West Bromwich West; West Dorset; West Worcestershire; and Workington. Mr Deputy Speaker, you can tell the breadth and depth of concern about this issue.
	The petition states:
	The Petition of residents of Beverley and Holderness Constituency,
	Declares that the Petitioners believe that levying VAT on static holiday caravans would cost thousands of jobs in caravan manufacturing, from their suppliers, and in the wider UK holiday industry; and notes that the Petitioners believe that such a levy would lose revenue for the Government.
	The Petitioners therefore request that the House of Commons urges the Government to reverse its decision to levy VAT on static caravans.
	And the Petitioners remain, etc.
	[P001027]
	The following petitions were also presented:
	The Petition of residents of Rochdale.
	[P001060]
	The Petition of residents of Christchurch,
	[P001061]
	The Petition of residents of West Bromwich West.
	[P001062]
	The Petition of residents of Dwyfor Meirionnydd.
	[P001063]
	The Petition of residents of Clacton on Sea.
	[P001064]
	The Petition of residents of South Down.
	[P001065]
	The Petition of residents of Bridgwater and West Somerset.
	[P001066]
	The Petition of residents of West Dorset.
	[P001067]
	The Petition of residents of Filton and Bradley Stoke.
	[P001068]
	The Petition of residents of Montgomeryshire.
	[P001069]
	The Petition of Residents of Ceredigion.
	[P001070]
	The Petition of Residents of Eastleigh.
	[P001071]
	The Petition of Residents of Selby and Ainsty.
	[P001072]
	The Petition of residents of Birmingham Northfield.
	[P001073]
	The Petition of residents of Poole.
	[P001074]
	The Petition of residents of Blyth Valley.
	[P001075]
	The Petition of residents of Bognor Regis and Littlehampton.
	[P001076]
	The Petition of residents of Forest Heath.
	[P001077]
	The Petition of residents of Carlisle.
	[P001078]
	The Petition of residents of South Dorset.
	[P001079]
	The Petition of residents of Tynemouth.
	[P001080]
	The Petition of residents of North Norfolk.
	[P001081]
	The Petition of residents of North Devon.
	[P001082]
	The Petition of residents of Stirling.
	[P001083]
	The Petition of residents of Harwich and North Essex.
	[P001084]
	The Petition of Residents of Blackpool South.
	[P001085]
	The Petition of residents of Workington.
	[P001086]
	The Petition of residents of Islwyn.
	[P001087]
	The Petition of residents of New Forest West.
	[P001088]
	The Petition of residents of Shrewsbury and Atcham.
	[P001090]
	The Petition of residents of Milton Keynes South.
	[P001091]
	The Petition of residents of Ludlow.
	[P001092]
	The Petition of residents of West Worcestershire.
	[P001093]

Alan Beith: I present a petition in the same terms as those presented by the hon. Member for Beverley and Holderness (Mr Stuart), from constituents of mine at the Waren caravan park, Waren Mill, Bamburgh in the Berwick-upon-Tweed constituency. My constituents are deeply concerned about the impact not just on manufacturing, but on the holiday parks and caravan sites in whose business model sales are an important factor.
	The Petition of residents of Waren Caravan Park, Waren Mill, Bamburgh, Northumberland.
	[P001028]

Andrew Percy: I, too, present a petition, on behalf of the residents of the Brigg and Goole constituency, in the same terms as my hon. Friend the Member for Beverley and Holderness (Mr Stuart).
	The Petition of residents of Brigg and Goole.
	[P001029]

Philip Hollobone: Having voted against the imposition of VAT on static holiday caravans in the Budget resolution debate on 18 April, I have the privilege to present a petition in the same terms on behalf of residents of the Kettering constituency.
	The Petition of residents of Kettering constituency.
	[P001030]

Lisa Nandy: I present this petition, on behalf of the residents of Wigan, in the same terms as the hon. Member for Beverley and Holderness (Mr Stuart).
	The Petition of residents of Wigan.
	[P001031]

Peter Aldous: I present a petition in similar terms on behalf of residents of the Waveney constituency in Suffolk.
	The Petition of residents of Waveney.
	[P001032]

Laura Sandys: I have the great honour of presenting this petition in the same terms as my hon. Friend the Member for Beverley and Holderness (Mr Stuart).
	The Petition of residents of South Thanet.
	[P001034]

Peter Bone: I present this humble petition of residents of Wellingborough in Northamptonshire and the surrounding areas in the same terms as those that have already been presented and, in particular, because there is the significant manufacturing of such caravans in my constituency.
	The Petition of residents of Wellingborough.
	[P001037]

David Davis: It is my privilege to present a petition in the same terms as those of my hon. Friend the Member for Beverley and Holderness (Mr Stuart), who made it clear that this is being done to prevent enormous numbers of job losses around the country, with the highest concentration probably in East Yorkshire, not least in Haltemprice and Howden, on behalf of which I present this petition signed by 612 residents.
	The Petition of residents of Haltemprice and Howden constituency.
	[P001039]

John Whittingdale: I thank and congratulate my hon. Friend the Member for Beverley and Holderness (Mr Stuart) on the way in which he has conducted his campaign. My constituency contains a large number of static caravan parks, and I therefore endorse all his remarks. It is my honour to present a petition on behalf of my constituents in Maldon.
	The Petition of residents of Maldon.
	[P001038]

Mark Garnier: I add my gratitude and thanks to my hon. Friend the Member for Beverley and Holderness (Mr Stuart) for the effort he has made in representing the interests of this industry. In similar terms to the aforementioned petition, I have great pleasure in bringing to the House 400 signatures from the residents of Wyre Forest.
	The Petition of residents of Wyre Forest.
	[P001036]

David Hanson: In similar terms to those of the hon. Member for Beverley and Holderness (Mr Stuart), I have pleasure in presenting a petition to this House on behalf of more than 1,000 residents of Delyn in north Wales—not only those associated with caravan parks but those associated with the fish and chip shops, pubs and supermarkets that serve them.
	The Petition of residents of Delyn constituency.
	[P001040]

Diana Johnson: I have pleasure in presenting a petition of 3,249 signatures from the residents of the constituency of Kingston upon Hull North, and also presenting, on behalf of my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson), a petition signed by 1,788 of his constituents. This matter is of particular importance to both our constituencies owing to the manufacturing of caravans in the city of Hull.
	The Petition of residents of Kingston upon Hull and East Yorkshire.
	[P001044]

Martin Caton: I present a petition in the same terms from the residents of Gower.
	The Petition of residents of Gower.
	[P001035]

Karl Turner: I present a petition with 1,401 signatures on behalf of the residents of Kingston upon Hull East. This issue is terribly important and even more so today, with Willerby Holiday Homes announcing a consultation on redundancies for 350 staff as a direct result of what the Government plan to do.
	The Petition of residents of East Hull constituency.
	[P001042]

Alan Reid: I present a petition in the same terms signed by 346 people who are residents of, or visitors to, Argyll and Bute. Owners of static caravans bring a great deal of money to Argyll and Bute, and many businesses in the constituency are very worried that the impact of this tax will mean a loss of revenue and a loss of jobs.
	The Petition of residents of Argyll and Bute constituency, and others.
	[P001043]

Andrew Turner: I present a petition in similar terms from the Isle of Wight, from 356 residents or visitors.
	The Petition of residents of the Isle of Wight Holiday Parks.
	[P001047]

Ian Paisley Jnr: It is my honour and privilege to prevent a “Stop Caravan Tax” petition of behalf of my constituents, in the same terms as that presented to the House by my friend the hon. Member for Beverley and Holderness (Mr Stuart). In the wonderful villages of Bushmills and Ballycastle, and indeed in the Glens, caravan parks will potentially be destroyed by such a tax. As I voted against it, it is my honour to defend the rights of those villagers and prevent this tax on holidays.
	The Petition of residents of North Antrim constituency.
	[P001048]

Greg Knight: I seek to present a petition signed by approximately 1,000 residents of East Yorkshire and beyond. It is in identical terms to that presented by my hon. Friend the Member for Beverley and Holderness (Mr Stuart). My constituents who are petitioning agree with his, and I agree with him.
	The Petition of residents of East Yorkshire.
	[P001049]

Sandra Osborne: I fervently wish to present a petition on behalf of my constituents in the beautiful county of Ayrshire, which depends heavily on tourism and will be most adversely affected if this measure goes through.
	The Petition of residents of Ayr, Carrick and Cumnock.
	[P001045]

Simon Hart: I am delighted to present three petitions in similar terms to those presented by my hon. Friend the Member for Beverley and Holderness (Mr Stuart), on behalf of residents of the Wood Park Caravans, Celtic Holiday Parks and Perran Sands parks and many other people in my constituency.
	The Petition of residents of Carmarthen West and South Pembrokeshire constituency.
	[P001052]
	The Petition of residents of Perran Sands.
	[P001053]
	The Petition of residents of Wood Park Caravans.
	[P001054]

Amber Rudd: My constituency has the most beautiful caravan sites in the country. I have the honour of presenting this petition on behalf of my constituents.
	The Petition of residents of Hastings Rye constituency.
	[P001055]

Martin Vickers: As a representative of Cleethorpes, which I have said on many occasions is the premier resort of the east coast, I am privileged to present this petition in similar terms to that presented by my hon. Friend the Member for Beverley and Holderness (Mr Stuart).
	The Petition of residents of Cleethorpes.
	[P001056]

Mark Williams: I present this petition on behalf of residents of Ceredigion in west Wales, in similar terms to that presented by the hon. Member for Beverley and Holderness (Mr Stuart). In particular, I wish to bring to the House’s attention their concerns about job losses in the small business sector, which supports the tourism industry.
	The Petition of residents of Ceredigion.
	[P001051]

John Healey: I have a petition here, “Stop the Caravan Tax”, signed by Scott Staniforth of 45 Vicar road, Wath, and others from my constituency. They see that the tax on static caravans could add £8,000 to the price of a caravan, price families out of their regular holiday and thwart many people’s ambition to own an affordable second home. They have therefore signed a petition in similar terms to that presented by the hon. Member for Beverley and Holderness (Mr Stuart).
	The Petition of residents of Wentworth and Dearne constituency.
	[P001050]

Andrew George: In the 11 minutes remaining, I should like to deliver a petition on behalf of Mr Norman Bliss of the Lower Treave caravan park at Crows-An-Wra, near Penzance, in my west Cornwall and Isles of Scilly constituency, the premier holiday destination of the United Kingdom. In handing me this petition, the petitioners pointed out that the measure, far from resolving the anomaly that the Government said they had identified, created a new anomaly between static caravans and static bricks and mortar. I am proud and very pleased to support the hon. Member for Beverley and Holderness (Mr Stuart) in his excellent campaign.
	The Petition of residents of the St Ives constituency.
	[P001058]

Simon Reevell: I am delighted to present a petition on behalf of my constituents in similar terms to that presented by my hon. Friend the Member for Beverley and Holderness (Mr Stuart). Up to a quarter who signed the petition expect to lose their jobs if the proposal is not reversed.
	The Petition of residents of Dewsbury.
	[P001041]

LITTERING AND FLY-TIPPING

Motion made, and Question proposed, That this House do now adjourn.—(Bill Wiggin.)

Andrew Selous: I am very grateful to Mr Speaker for granting this debate on a subject about which I have always felt strongly. I spoke of my dislike of fly-tipping in my maiden speech on 2 July 2001, and unfortunately, despite more money being spent on clearing up litter and fly-tipping, the problem has got worse and not better.
	Although the Government have reduced the deficit by a quarter in the two years they have been in office, they are still spending more than their income, which is why the £863 million spent on street cleansing in 2011 is such a huge sum. If we add the cost of cleaning the highways and railways, and the cost of removing fly-tipping from public and private land, the actual amount of public money spent on cleaning up litter in England is well over £1 billion annually. If people behaved responsibly and cared for their local areas by not littering, that money could be used to care for the needy and the vulnerable in our communities.
	My argument is that we need rigorous and robust action from the Government, the police and local authorities, as well as a massive increase in personal responsibility and care for our local environment from an army of concerned citizens. I pay tribute to street cleansing staff up and down our country. They do an important and valued job, and I thank them for it, but they cannot keep our country clean on their own, which is why I wholeheartedly welcome the Daily Mail “Spring Clean for the Queen” campaign and pay tribute to the Campaign to Protect Rural England “Stop the Drop” campaign. I also note that the Country Land and Business Association says that it costs its members an average of £800 per incident to remove non-toxic fly-tipped waste, and several thousand pounds per incident if the waste is hazardous and includes, for example, asbestos.
	All of us have a responsibility not to drop litter and to keep our immediate environment clean. We can all keep the area around our homes clean. Shopkeepers can clean in front of their premises, and businesses can keep their immediate environment clean as well. Public servants should also join in. When I go round schools in my constituency, one of the ways in which I judge head teachers is whether they pick up litter as they show me around their school. I have noted that the schools in which the head teachers pick up litter tend to be cleaner. If it is not beneath the head teacher to pick up litter, the other staff tend to get the message fairly quickly.
	I also commend the material to combat littering produced by the Campaign to Protect Rural England for use in our schools. This work is really important. If children are not learning at home that littering is wrong, they need to be told this very clearly in schools. I was delighted to read recently that Mrs Patricia Prosser, in the village of Stanbridge in my constituency, has just been nominated as villager of the year for the regular litter-picking that she undertakes in her village. She does not have to do it, it is not her job specifically, and she is not paid to do it, but she does it because she cares
	about her village and her environment. All of us could well follow her example, whether we live in a town, village or city.

Jim Shannon: I thank the hon. Gentleman for bringing this important issue before the House tonight. Does he think that increased penalties for those who drop litter and fly-tip are the way forward? In Northern Ireland, council officials have the authority to issue fines on the spot to those whom they observe littering. Is that the way forward, rather than letting people get away with it?

Andrew Selous: The hon. Gentleman makes a good point. I hope that he will have been pleased, as I was, by the announcement made by the Government today that they will make it a criminal offence regularly to dump rubbish in gardens and that those who are guilty of “persistent unreasonable behaviour” and who have ignored warnings to clear away unsightly rubbish will be subject to on-the-spot fines of £100—which is higher than some of the current penalties—or a court-imposed fine of up to £2,500. All of us know how it ruins a neighbourhood to have sofas, mattresses or fridges lying around in gardens, making an area look a complete mess. It is not fair on the decent householders who have to live in proximity to such situations. I urge the Government to bring in these community protection notices as quickly as possible as they are very much needed.
	Much of the litter in the UK is thrown from vehicles and I was very interested to see that some London local authorities now have the power to impose a £100 fine on the registered owner of vehicles whose occupants throw litter from those vehicles and that this has become a civil offence. Can this scheme be spread across the whole of the United Kingdom?
	I understand that local authorities across the UK and not just in London can now introduce similar byelaws into their areas. Can the Minister explain how local authorities can go about this? A poll released by the AA yesterday of 8,800 of its members showed that 61% think that people caught throwing litter from cars should be punished with three points on their licence, a fixed-penalty fine and possibly a community service order. There seems to be a public appetite for taking more robust action on this issue, and when the newsreader, Alice Arnold, recently threw a plastic bottle back into the car in front of her whose occupants had just chucked it on to the road, she was rightly widely praised for her actions.
	I wonder whether we could make it possible for fly-tipped waste to be taken to tidy tips for no charge. We need to make it easy for landowners, both public and private, to clear up fly-tipped waste—after all, it is not their fault it is there—and not disincentivise them from doing so. It might be helpful if the local authority certified that the waste had been fly-tipped.
	I also wonder whether it is possible to increase the fines for littering. I understand that in Los Angeles the fine for dropping litter is $1,000 and that it is vigorously enforced by the police. People do not tend to drop litter in that city, and unsurprisingly it is much cleaner than many British cities as a result. Do the Government plan to increase fines? Does the Minister believe that more police officers should be involved in enforcing the penalties? I understand that, at present, the issuing of fixed penalty
	notices is mainly done by local authority officers and police community support officers. Does the Minister think that there is scope for all police officers to join the front line of the fight against the litter louts?
	We need to take every opportunity to tell the public that littering is offensive and wrong, and will be punished. I am pleased, therefore, that the Highways Agency is trialling anti-littering signs on its electronic gantries across motorways in three areas. I would like this initiative rolled out across the whole UK.
	In many European countries, plastic bags are simply not offered at supermarkets. Customers can either buy a permanent bag for a few euros or are given a brown paper bag. Unsurprisingly, those countries have many fewer plastic bags littering the countryside. Plastic bags do not biodegrade easily and consequently remain as litter for very long periods. Will the Minister update the House on the Government’s plans to vastly reduce the number of single-use plastic bags being used in the UK?
	Some other countries also have deposit refund schemes. Do the Government believe that such schemes could be introduced in the UK? I understand that the CPRE has done some research in this area and believes that such schemes would make a difference and could be introduced at no cost to the Government. What assessment have they made, then, of how successful these schemes are in other countries?
	All Members care for our country and want to make it a better place. We all have a role, therefore, in trying to make Britain a country in which there is less litter. The amount of litter throughout our country is symptomatic of how people view their country and their local community. If someone litters, it means they do not care about their immediate environment or the impact their actions have on others. Litter is about personal responsibility and whether we, as citizens, care about the country we live in. As we approach a moment of great pride in our country’s history, celebrating the diamond jubilee of Her Majesty the Queen, I hope that we can all—those in authority and individual citizens—play our part in making this country one that has far less litter and fly-tipping in it.

Richard Benyon: I congratulate my hon. Friend the Member for South West Bedfordshire (Andrew Selous) on bringing this matter to the House and on continuing his long-running and cogent campaign. I share his phobia of litter and fly-tipping. Without wanting to sound sanctimonious, I will tell the House that during the election campaign, so concerned were my supporters about litter that we took a day off campaigning to pick up litter in the otherwise fairly tidy town of Newbury. The issue goes to the heart of what we feel about our communities, our sense of place and this country.
	My hon. Friend referred to his constituent, Mrs Prosser. I am sure that we can all think of Mrs Prossers in our constituencies who, unthanked and unrewarded, do amazing work, because they have pride in, and mind about, their community. As a society, we have to find a better way of rewarding and thanking people such as Mrs Prosser for their wonderful work.

Stephen Phillips: The simple fact is that Mrs Prosser and others should not have to undertake such activities, but at least while they do have to I hope that my hon. Friend will join me in congratulating her and all those in my constituency who clear litter from the verges on the valuable work they do.

Richard Benyon: I entirely agree with my hon. and learned Friend and thank the volunteers in his constituency who do that, and I resent, in almost equal measure, the people with such little regard for our communities and countryside that they throw the litter in the first place, thereby requiring those volunteers to perform the selfless act that he describes.
	Let me set out to the House the Government’s plans for good-quality local environments and the actions that we are taking to tackle littering and fly-tipping. We know from repeated public surveys that the appearance of local neighbourhoods matters greatly to people, ranking alongside or above concerns such as global climate change or rising fuel prices. Poor quality environments can destroy neighbourhood pride and create a climate of fear and neglect. These are therefore important issues, and it is right that we take a close interest in addressing them. Local authorities are on the front line of dealing with littering and fly-tipping. They have the duty to clean up public land and the powers to take enforcement action to fit local circumstances. Although most fly-tipping on public land is handled by local authorities, the Environment Agency also has a role in investigating large fly-tipping incidents, in particular those involving hazardous waste or organised crime. As my hon. Friend the Member for South West Bedfordshire said, on private land the responsibility for dealing with fly-tipping rests with the landowners—often at great cost to them and their businesses—although many local authorities offer advice, guidance and, in some cases, help.

Tessa Munt: I wonder whether the Minister could address the problem of different local authorities having different responsibilities. In my area, Somerset county council has shut a number of local recycling centres, leaving the district councils as the level responsible for dealing with fly-tipping. That transfers the cost from the county council’s budget, but means that district councils have to deal with an increasing problem. Indeed, they are left having to charge, through council tax, which seems most unfair.

Richard Benyon: I understand that all local authorities, like the Government, face difficulties and have to set priorities. If we are to be a truly localist Government, we have to leave decisions about priorities to be taken locally. In areas with unitary councils there is less misunderstanding on the part of the public about who is responsible. When I was a district councillor, people were always blaming the county council for things that were my responsibility, and vice versa. I know that this is a difficulty in areas with two-tier local authorities, but I understand the point my hon. Friend makes.
	The charity Keep Britain Tidy carries out a survey for DEFRA each year, and this year the 10th report was produced. It provides an opportunity to look across the changes in the last decade and highlights the fact that
	litter levels are not much better than when the survey was first carried out, in 2001, with 15% of areas deemed “unsatisfactory” for litter. Yet since that time, the costs to local authorities of sweeping the streets, including dealing with litter, has risen by hundreds of millions of pounds, as my hon. Friend the Member for South West Bedfordshire said, to little short of £900 million.
	DEFRA and the Environment Agency host the collection data on fly-tipping, through the Flycapture reporting system, which helps to provide evidence of the nature and scale of fly-tipping and allows decisions to be made locally and nationally on the best interventions to tackle the problem. Fly-tipping continues to have too great a detrimental impact on the local environment. In 2010-11, there were 820,000 fly-tipping incidents in England. Although that is a reduction compared with the previous year, this is in part due to changes in reporting practices by some authorities. The true figure is likely to be considerably more, as it is recognised that many incidents, particularly those on private land, go unreported. We also know that a lot of fly-tipping involves domestic waste, which can ordinarily be collected by local authorities or taken, as has been said, to civic amenity sites.
	So what can be done to make real inroads into the persistent levels of litter? The Government’s commitment in this regard is clearly set out in the coalition’s programme for government. We aim to reduce litter as part of our drive towards a zero-waste economy. Changing the attitude and behaviour of those who drop litter and casually fly-tip is essential, which is why the Government are committed to working with Keep Britain Tidy, businesses, local authorities and community groups on their “Love Where You Live” campaign. It appeals to all sectors of business and across all sectors of society, and support is coming from Wrigley, McDonald’s, Network Rail, Coca-Cola, Waitrose and many others. Businesses can contribute in many ways: by supporting the campaigning effort; by carrying their message to customers, staff and others; and, directly, through changing the design of their products, packaging and services to reduce the possibility of litter from the outset. The “Love Where You Live” campaign holds promise in being able to attract widespread support to capture the public’s imagination and inspire civic pride, especially in this year of the Queen’s diamond jubilee, and the London Olympic and Paralympic games.

Christopher Pincher: Will my hon. Friend give way?

Richard Benyon: I am very short of time and I must answer the questions put by my hon. Friend the Member for South West Bedfordshire, but I will certainly give way at the end if I have time.
	I, like my hon. Friend the Member for South West Bedfordshire, welcome the Daily Mail’s “Spring Clean for the Queen” campaign to encourage clean-up events for the Queen’s diamond jubilee.
	I know that littering from vehicles is a particular problem for local authorities. In March, the Secretary of State met businesses, trade associations and local authority representatives to look at what more can be done to tackle this. There was great enthusiasm for voluntary action and for innovative ideas coming forward
	from business, including carrying branding and anti-litter messages in vehicles, in outlets and in communications with customers and staff to raise awareness of the issue. I was interested in what my hon. Friend was saying about the Highways Agency, because there is much more we can do, working with it.
	Changing attitudes and behaviour is key. Much can be done through voluntary approaches to tackle littering from vehicles, but the Government’s mind is not closed to the regulatory route if that will work. London boroughs will soon start using powers under private legislation to issue a civil penalty against the registered keeper for littering. We want to see how that works in practice—to see if it helps to support behaviour change efforts elsewhere. If it works well, we will consider applying the approach more widely across the country.
	The CPRE proposal for implementing a bottle deposit scheme has been mentioned. As part of the review of waste policies in 2011, the Department undertook a full analysis of the costs and benefits of implementing such a deposit system, based on the CPRE’s report “Have we got the bottle?” Although such a scheme may increase recycling rates for the materials covered and reduce litter, the estimated costs of running such a scheme are very high; they are much higher than alternative measures that could achieve the same aims. Taking that into account, it was decided not to take forward this option for the time being and instead to concentrate on other ways to increase recycling and address litter.
	My hon. Friend mentioned bags. Concern about single-use carrier bags has also been raised frequently with my colleague Lord Taylor of Holbeach, who leads on this issue. We share the concern about the effect that those bags have on the environment, and about the increase in their distribution. We are looking carefully at all options to make sure that we further reduce their usage, and we are paying close attention to developments in Wales, where a 5p per bag minimum charge was introduced in October last year. The Welsh Government are currently evaluating their policy, and we will consider our position on carrier bags further following the evaluation of that scheme in July.
	Let me deal with other issues that my hon. Friend raised, particularly the action we are taking against fly-tipping. The Government’s review of waste policy in England, published in June 2011, set out a range of measures to tackle fly-tipping. The approach advocated in the review is to make it easier for businesses and others to do the right thing with their waste, while also ensuring that the sanctions available act as a real deterrent to those responsible for waste crime.
	A major area of concern is the cost incurred by public landowners for clearing up fly-tipping on their land where local authorities are not under any obligation to act. We do not have an accurate figure for fly-tipping on private land or for clearance costs, as landowners are not required to report them to Government. As my hon. Friend the Member for South West Bedfordshire says, however, the Country Land and Business Association estimates that it might cost their members, or landowners across the country, in the region of £50 million to £100 million a year to dispose of fly-tipped waste.
	This issue was highlighted in recommendations made by the Farming Regulation Task Force in 2011. We are working towards the development of best practice on the prevention, reporting, investigation and clear-up of
	fly-tipping through the National Fly-tipping Prevention Group and the taskforce implementation group. The aim is to allow local solutions that will free landowners of much of the “hassle” associated with clearing fly-tipped waste from their land. We are also looking at developing a partnership approach between landowners and local authorities that will encourage clearance of fly-tipped waste and the adoption of measures to improve local environmental quality. We will be presenting our approach at a ministerial summit to be held with key stakeholder groups later this summer.
	As for sanctions for fly-tipping, these include stronger powers for the Environment Agency and local authorities to seize vehicles further to investigate suspected involvement in fly-tipping, as well as revoking the registration of waste carriers who repeatedly flout the law. While the penalties for fly-tipping are sufficient—up to a £50,000 fine on summary conviction—we want to ensure that the levels of fines and sentences handed down by the courts act as a deterrent. We have provided evidence to the Sentencing Council, which is considering producing a separate sentencing guideline for magistrates on fly-tipping. I am now happy to give way to my hon. Friend the Member for Tamworth (Christopher Pincher), if he still wishes to intervene.

Christopher Pincher: If the offer is still on the table, I will; I am grateful to the Minister for sweeping me up in his remarks. He rightly says that public attitudes need to be changed. Does he agree that the flexible attitude of some councils to supporting volunteers is to be commended? In my Tamworth constituency, Streetscene, the street cleaners, offer volunteers bags, litter pickers and gloves, and come back at the end of the litter-picking exercise to take the bags away. Is not that sort of positive flexibility to be commended?

Richard Benyon: It certainly is. I commend those sorts of schemes, which I have seen happening elsewhere. There is also good partnership working to be had between parish councils, town councils and higher tiers of local authorities where equipment can be shared and know-how and guidance can be supplied to volunteer groups and communities that wish to carry out their own spring cleans. This is clearly to be welcomed.
	What about people who put their waste out for collection incorrectly? This is a matter of concern. Hard-working people, who already have enough worries, should not face the threat of being punished for innocent mistakes such as putting their bins out an hour or two early. It can be a problem when that is wrongly labelled as somehow similar to fly-tipping. That is why we want to change the law so that only the small minority whose behaviour causes problems for their neighbours and harms the local environment as my hon. Friend described will be punished; we want to make the fines more proportionate. As a first step, we are changing the law to reduce the level of fines under the current fixed
	penalty notice regime. These changes are due to come into force on 30 May. We intend to make longer-term changes, including removing the current criminal sanctions, as parliamentary time allows.
	My hon. Friend raised the issue of sanctions. He is right that littering is an offence under the Environmental Protection Act 1990. The litterer can be prosecuted in magistrates courts and can on conviction face a fine of up to £2,500, as well as getting a criminal record. As an alternative to prosecution, local authority enforcement officers can issue a fixed penalty notice of between £50 and £80; it can be set locally, and is soon to rise. So there are sanctions, and they do hurt the perpetrators of this crime—for it is a crime.
	Underlying all that, however, is the need for us as a Government, and, perhaps, us as a society, to view the problem as a culture of littering which has been allowed to develop and which we see regularly in some corners of our constituencies. It requires education in schools, it requires education of the adult population, and it requires a true partnership between those who love and respect their communities—and who constitute the vast majority—and the inconsiderate minority who are apparently happy to see their communities trashed. I am a great believer in the “broken windows” theory of policing, and dealing with littering is at the heart of that. I hope that what I have said tonight provides clear evidence of the Government’s commitment to tackling the blight caused by litter, fly-tipping and waste.

Andrew Selous: Will my hon. Friend give way?

Richard Benyon: I am happy to do so, in the minute that is left.

Andrew Selous: I should be grateful if the Minister would return to whether local authorities throughout the United Kingdom can now follow the example of London authorities. Has the Localism Act 2011 given all our councils the power to make byelaws similar to those being made in London to deal with the problem of litter being thrown from vehicles?

Richard Benyon: Yes. Under the neighbourhood planning scheme and the Localism Act, authorities elsewhere in the country will be able to do what is being done in London, and I expect that to prove very welcome.
	I think that this is an ideal issue for Members to discuss. My hon. Friend the Member for South West Bedfordshire and others who have remained in the Chamber to take part in the debate have demonstrated that it is possible for us to show real leadership and, together, to remedy a problem that has become much too prevalent throughout the country.
	Question put and agreed to.
	House adjourned.